MG2351 - PRINCIPLES OF MANAGEMENT

SYALLABUS
UNIT I OVERVIEW OF MANAGEMENT
Definition - Management - Role of managers - Evolution of Management thought -
Organization and the environmental factors Trends and Challenges of Management in
Global Scenario
UNIT II PLANNING
!ature and "ur"ose of "lanning - #lanning "rocess - T$"es of "lans Ob%ectives -Managing
b$ ob%ective &M'O( Strategies - T$"es of strategies - #olicies Decision Ma)ing - T$"es of
decision - Decision Ma)ing #rocess - Rational Decision Ma)ing #rocess - Decision Ma)ing
under different conditions
UNIT III ORGANIZING
!ature and "ur"ose of organizing - Organization structure - *ormal and informal grou"s+
organization - ,ine and Staff authorit$ - De"artmentation - S"an of control -Centralization and
Decentralization - Delegation of authorit$ - Staffing - Selection and Recruitment - Orientation -
Career Develo"ment - Career stages Training - #erformance -""raisal
UNIT IV DIRECTING
Creativit$ and .nnovation - Motivation and Satisfaction - Motivation Theories -
,eadershi" St$les - ,eadershi" theories - Communication - 'arriers to effective
communication - Organization Culture - Elements and t$"es of culture Managing cultural
diversit$
UNIT V CONTROLLING
#rocess of controlling - T$"es of control - 'udgetar$ and non-budgetar$ control techni/ues -
Managing #roductivit$ - Cost Control - #urchase Control Maintenance control - 0ualit$
Control - #lanning o"erations
TEXT BOOKS:
1 Ste"hen # Robbins and Mar$ Coulter2 3Management32 #rentice 4all of .ndia2 5th edition
6 Charles 7 , 4ill2 Steven , McShane2 3#rinci"les of Management32 Mcgra8 4ill Education2
S"ecial .ndian Edition2 699:
REFERENCES:
1 4ellriegel2 Slocum ; <ac)son2 3 Management - - Com"etenc$ 'ased -""roach32 Thomson
South 7estern2 19th edition2 699:
6 4arold =oontz2 4einz 7eihrich and Mar) > Cannice2 3Management - - global ;
Entre"reneurial #ers"ective32 Tata Mcgra8 4ill2 16th edition2 699:
? -ndre8 < Dubrin2 3Essentials of Management32 Thomson South8estern2 :
th
edition2 699:
UNIT I OVERVIEW OF MANAGEMENT
Definition M!n!"e#ent Ro$e of #!n!"e%& E'o$(tion of M!n!"e#ent t)o(")t
O%"!ni*!tion !n+ t)e en'i%on#ent!$ f!,to%& - T%en+& !n+ C)!$$en"e& of M!n!"e#ent in
G$o.!$ S,en!%io/
0000000000000000000000000000000000000000000000000000000000000
E'o$(tion of M!n!"e#ent T)o(")t
as ho8 the mind controls the human bod$ and its function similar
management &mind( controls the various activities & human bod$( in the
Organization
Collection of "h$sical e/ui"ments2 1 M2& in Organization Men2
Machine2 Materials2 Mone$2 leads to nothing *or efficient and "rofitable
functioning it is necessar$ that all these factors are "ut to 8or) in a co-
ordinate manner
MANAGEMENT:
Management is the art of getting things done through others and 8ith
formall$ organized grou"s
OR
Management is the art and science of organizing and directing human efforts
applied to control the forces and utilize the material of nature for the benefit of
man A#e%i,!n &o,iet3 of #e,)!ni,!$ en"inee%&/
F(n,tion!$ ,on,e4t-as a "rocess2 management is 8hat a manager "erforms
Wi$$i!# S4%ie"e$
Management is the "rocess b$ 8hich a coo"erative grou" directs action
to8ards a common goal 5o&e4) Me&&ie
6(#!n Re$!tion& ,on,e4tManagement is the art of directing and ins"iring
"eo"le
5/D Moone37 !n+ A/C R!i$e3
Le!+e%&)i4 !n+ +e,i&ion #!8in" ,on,e4tManagement is the art and
science of decision-ma)ing and leadershi"
Don!$+ 5 C$o(")
Management means decision-ma)ing Ro&& Moo%e
P%o+(,ti'it3 ,on,e4tManagement is the art of )no8ing 8hat to do
------------ in the chea"est 8a$ F/W T!3$o%
Management is a techni/ue of increasing "roductivit$
--Management means designing2 organizing defining goals formulating
"olicies and strategies in accordance 8ith the "revalent environmental conditions
and these environmental conditions are )no8n as situations
--Management is merging /ualit$ and variet$ 8ith cost that is "roviding
unlimited variet$ of goods2 better /ualit$ and at lo8est "rice level to the customers
--Management is defined as a "rocess of identif$ing "roblems and threats and
ta)ing care of these "roblems and threats in such manner that ultimatel$ these turn
out into o""ortunities 8hich could benefit the organization in accom"lishment of its
ob%ectives
In $!te&t 'ie9:
!o8 da$s in cor"orate sector ta)ing advantage of the o""ortunities does not
matter 7hat matters is to convert or translate the o""ortunities then to face
difficulties
Definition& .!&e+ on #i:e+ 'ie9&:
Good management achieves a social ob%ective 8ith the best use of human and
material energ$ and time and 8ith satisfactions for the "artici"ants and the
"ublic
M!%3 ,(%&in" Ni$e&
Management is the direction of human behaviour to8ards a "articular goal or
ob%ective
Conclusion:
On the basis of all the above-mentioned definitions it can be asserted
Management is the "rocess 8hich b$ "lanning2 organizing2 staffing2 leading and
controlling2 a human grou" ma)es "ossible the ma@imum and efficient use of
"h$sical resources and hel"s in realizing the "re-determined ob%ectives of an$
organization
.n modern times 8hen human needs are continuousl$ rising2 it is
absolutel$ im"ossible to fulfill them single-handed .n such a situation the need of
grou" activit$ is felt Man cannot "roduce an$ single thing b$ himself alone and
there is al8a$s the necessit$ of a human grou" 8hose activities and be named
collective effort Thus on human grou" "roduce one "articular "roduce 8hile
another such grou" "roduce something different and hence2 human needs are fulfill
b$ collective efforts of different human grou"s
!o8 the /uestion arises 8hether all the "eo"leAs com"rising a "articular
human grou" are com"etent enough to achieve success in their activities 8ithout
an$ outside discussion and control
The obvious to this all-im"ortant /uestion can onl$ be in the negative The
reason for such an ans8er is com"le@ So long "articular human grou"s for into
have their air aims2 definite "lanning2 "ro"er distribution of 8or)2 defining rights
and duties2 establishing "ro"er co-ordination among them2 directing and controlling
their activities2 success cannot be achieved These are the "roblems2 8hich give rise
to another /uestion2 8hich is e/uall$ im"ortant2 and the /uestion is ho8 to
overcome these "roblemsB The ans8er to this reall$ com"le@ /uestion in inherent in
management
Through the medium of management all these above-mentioned "roblems can
be solve The activities of a human grou" can be efficientl$ managed on the "re-
determined "roblems can be effectivel$ achieved handling b$ a manager .t 8ould
not be out of "lace to mention here that the absence of "ro"er management2 the
activities of a human grou" are li)e a shi" 8ithout a ca"tain Thus it is evident that
success of collective efforts re/uires some s"ecial "o8er -!D T4-T #O7ER .S
T4E M-!-GER2 8ho ensures the success of different activities b$ the "rocess of
management .t is im"ortant to classif$ here that the im"ortance of management is
not limited to business alone but it is needed at all those "laces 8here human
activities ta)e "lace-for e@am"leC educational .nstitutions2 Religious .nstitution2
Govt de"artments2 unions2 forces2 families
ME-!.!G O* M-!-GEME!T
D-n$thing minus Management is nothingE
--FS)e%$e8!% !n+ S)e%$e8!%2;
MANAGEMENT:
The 8ord DmanagementE can be st$led as M-!-GE-ME!-T That means
manage men tactfull$ 7h$ manage men tactfull$ This is 8ith a vie8 to get the
things done being 8ith them Thus management means managing men tactfull$ to
get the things done being 8ith them Thus management2 .n order to manage men
tactfull$2 one has to understand the highl$ un"redictable and uncertain human
nature o8ing to this management is ver$ com"licated and challenging activit$
Some times it is )no8n as a grou" of administration officers 8or)ing in a
"articular institution and sometimes it means a "rocess of "lanning2 organizing2
staffing2 directing2 co-coordinating and controlling
.n the light of different o"inions the #e!nin" of #!n!"e#ent ,!n .e
!n!$3*e+ in t)e fo$$o9in" 9!3&:
&i( M!n!"e#ent !& ! 4%o,e&&: some times it is defined as a "rocess -
"rocess has means that different activities li)e "lanning2 organizing2
staffing2 leading2 controlling through a definite "rocess
&ii( .n other 8ords2 management is a definite "rocess 8hen coordinates
different activities for the attainment of an aim or target set b$ an
institution or organization
&iii( M!n!"e#ent !& ! +i&,i4$ine: management is fast emerging as a
disci"line Disci"line here means a se"arate and recognized sub%ect2 8hich
has its o8n identit$ Management is also being recognized as se"arate
s$llabi because it has its o8n thoughts2 "rinci"les and methodolog$
&iv( M!n!"e#ent !& ! e,ono#i, %e&o(%,e: economists have acce"ted
management as a resource of "roduction li)e other resources &land2 labour2
ca"ital2 material and machine( #roduction is not "ossible 8ithout these
basic things
&v( M!n!"e#ent !& ! no(n: 8hen it is addressed as a noun2 it is related to
those "ersons 8ho get other "eo"leAs 8or) com"leted E/"/ board of
directors2 managing2 general manages etc
Me!nin" of #!n!"e#ent !t "$!n,e:
&i( A& !n !,ti'it3C Get things done through others being 8ith them
&ii( A& ! 4%o,e&&C - series of interrelated functions "erformed in all
organizational
&iii( A& ! +i&,i4$ineC a sub%ect of stud$ dra8ing u"on )no8ledge of others
disci"lines - $oung and gro8ing disci"line
&iv( A& ! "%o(4C a bod$ of "ersons 8ho "erform the tas) of managing
organization -n elite grou" in the societ$
N!t(%e o% C)!%!,te%i&ti,& of #!n!"e#ent:
&i( Goal oriented
&ii( Gniversal
&iii( .ntegrated "rocess
&iv( Social "rocess
&v( -ctivit$ based
&vi( Grou" activit$
&vii( -rt as 8ell as science
&viii( Multi disci"linar$
&i@( .ntangible
&@( O"timum co-ordination bet8een human and material resources
&@i( The combination of multi"le functions
&@ii( Management is a distinct entit$
&@iii( Management is a "rofession
&@iv( Management based on authorities
&@v( .t is needed at all level
&@vi( .t is a social res"onsibilities
&@vii( #ur"oseful
&@viii(.t is an e@ecutive function
&@i@( .t is a coordinating force
&@@( D$namic in nature
&@@i( Management "rinci"les are relative not absolute ---- it means that
management results are according to the situation
&@@ii( Management is creative and innovative formulate creativit$H creativit$ is
the "rocess of develo"ing ne8 ideas
OR
-fter a careful stud$ of definitions 8e embar) u"on such features2 8hich
illustrate the nature of management Such features are as follo8sC
&i( It i& ! 4%o,e&&: "rocess means a s$stematic method of doing some 8or)
Management is recognized as a continuous "rocess .t is that "rocess in
8hich 8or) is done 8ith others or it is got done from them .n order to
achieve the "re-determined ob%ective a manager "erforms the 8or) of
"lanning2 organizing2 staffing2 leading and controlling - manager did
these 8or)s in a continuous order So2 it is a "rocess
&ii( G%o(4 effo%t&: management al8a$s efforts to grou" efforts and does not
a""l$ to an individuals - grou" rather than an individual can easil$ and
effectivel$ attain management of an enter"rise
&iii( It i& ! &o,i!$ 4%o,e&&: management is called a social activit$ because it is
connected 8ith the "eo"le 8or)ing in a human grou" and 8hich re/uires
organizing their efforts -n$ activit$2 8hich is connected 8ith the "eo"le
living in societ$2 is called a social activit$ .n this conte@t management is
also described as a social activit$
&iv( Att!in#ent of 4%e+ete%#ine+ o.<e,ti'e&: grou" efforts in management
are al8a$s directed to8ards the achievement of some "re-determined
ob%ectivesH 8ith out ob%ectives management 8ould be difficult if not
im"ossible
&v( M!n!"e#ent )!& ! +i&tin,t entit3: in vie8 of the 8idening sco"e of
business it is not "ossible for an o8ner to "erform all functions himself
7e can sa$ that s"eciall$ /ualified e@"erts are needed for managing the
com"an$
&vi( M!n!"e#ent i& ! (ni'e%&!$ !,ti'it3: it is clear that management is not
onl$ connected 8ith business but also 8ith non-business activities also2
8hich is also im"ortant Management is ever$8here
&vii( M!n!"e#ent !& ! 4%ofe&&ion: 8hen 8e have recognized the distinct
entit$ of management2 there should not be an$ doubt or hesitation to call it
a "rofession The /ualit$ of a "rofession is that he must "osses some
s"ecial /ualifications or abilit$ for 8hich he is "aid remuneration The
)no8ledge of management is also a /ualification and managers also get
their remuneration for it 4ence2 management is considered a "rofession
&viii( M!n!"e#ent i& !n int!n"i.$e fo%,e: management is a force2 8hich is not
visible .t can onl$ be feel or realized on the basis of the success of an
organization
&i@( It i& ! ,o#.in!tion of #($ti4$e f(n,tion&: the basic function of
management is to achieve the ob%ectives of the organization successfull$
That is 8h$ a manager has to "erform various function li)e "lanning2
organizing2 staffing2 leading and controlling etc hence management does
not mean one "articular %ob but it ha""ens to be a combination of various
%obs
MANAGEMENT - A%t7 S,ien,e !n+ P%ofe&&ion:
A& ! &,ien,e: s$stematic bod$ of )no8ledge2 universal "rinci"les2 scientific
e@"eriments2 cause and effect relationshi"2 validit$ and "redictabilit$
A& !n !%t: "ractical )no8ledge2 "ersonal s)ill2 creativit$ and continuous "ractice
A& ! 4%ofe&&ion: s"ecialized bod$ of )no8ledge2 formal education service motive2
re"resentative association and code of conduct management is not a full-fledged
"rofession
MANAGEMENT AS AN ART:
M!in fe!t(%e& of !%t !%e:
&i( -rt involves the a""lication of )no8ledge and s)ills to achieve desired
results
&ii( -rt is essentiall$ creative and the success of an artist is measured b$ the
results he achieves
&iii( -rt is a "ersonalized "rocess as ever$ artist has his o8n st$le or a""roach
&iv( -rt "rescribes ro8 to do things and it can be im"roved through continuous
"ractice
Management is essentiall$ an art becauseC
Fi%&t$37 the "rocess of management involves the use of )no8ledge and s)ills in
solving various "roblems
.t see)s to achieve a concrete "ractical result that is out"ut2 "rofits2 gro8th
etc
Se,on+$37 Management is creative as the manager creates ne8 things and im"roves
u"on the old things
T)i%+$37 Management is a "ersonalized "rocess ever$ manager has his o8n
a""roach and techni/ues to solve "roblems2 de"ending u"on the environment in
8hich he 8or)s
L!&t$37 the manager gets "erfection in the art of managing through continuous
"ractice
Thus management full$ lives u" to the descri"tion of an A%t and therefore it
is an art
OR
-rt im"lies the a""lication of )no8ledge and s)ills to bring about the desired
results
Fe!t(%e&:
1 P%!,ti,!$ 8no9$e+"e: ever$ art signifies "ractical )no8ledge -n artist
must not onl$ learn the theor$ but also its a""lication in "ractice Similarl$
a "erson cannot become a successful manager sim"l$ b$ reading the
theor$ if must also learn to a""l$ his )no8ledge in solving managerial
"roblems in "ractical life - manager is %udged not %ust b$ his technical
)no8ledge but his efficienc$ in a""l$ing that )no8ledge
6 Pe%&on!$ &8i$$: ever$ artist has his o8n st$le and a""roach to his %ob This
is level of their "ersonal s)ill Similarl$ ever$ manager has his
individual a""roach and st$le on solving managerial "roblems The
success of a manager de"ends on his "ersonalit$ in addition to his
technical )no8ledge
? Re&($t o%iente+ !44%o!,): art see)s to achieve concrete results Ever$
manager a""lies certain )no8ledge and s)ills to achieve the desired
results 4e uses CMAs to the gro8th of his organization
I C%e!ti'it3: art is basicall$ creative therefore ever$ "iece of art re/uires
imagination and intelligence to create - manager effectivel$ combines
and coordinates the factors of "roduction to create goods and services
J I#4%o'e#ent t)%o(") 4%!,ti,e: ever$ artist becomes more and more
efficient through constant "ractice Similarl$ a manager gains e@"erience
through regular "ractice and becomes more effective
Con,$(&ion:
One cannot become efficient and effective manager sim"l$ b$ learning
Management "rinci"les b$ heart it also re/uires "ractical a""lication of those
results
MANAGEMENT AS A SCIENCE:
M!in fe!t(%e& of &,ien,e !%e:
&i( Science is a s$stematized bod$ of )no8ledge
&ii( .t is based on cause and effect relationshi"
&iii( The scientific stud$ is based on observation and e@"eriments
&iv( The "rinci"les of science have universal validit$ and a""licabilit$
M!n!"e#ent i& ! &,ien,e .e,!(&e:
-ccording to the given information about science2 management is also a
s$stematized bod$ of )no8ledge .t consists of various conce"ts2 "rinci"les and
techni/ues develo"ed through observation and e@"erience These "rinci"les are
universal in nature and establish on cause and effect relationshi" 'ut the methods
of observation follo8ed b$ management are not "urit$ ob%ective because the
sub%ects are human beings 8hose behaviors cannot be "redicted 8ith absolute
accurac$
Thus management cannot be regarded as an e@act science li)e "h$sics and
chemistr$ .t deals 8ith the stud$ of behavior of human beings2 8hich is sub%ect to
constant changes and difficult to "redict
Thus management cannot be regarded as e@act science li)e "h$sics2
chemistr$ etc therefore management ma$ be called an ine@act science2 as is the case
8ith other social science li)e "s$cholog$2 sociolog$
OR
Science means a s$stematic bod$ of )no8ledge "ertaining to a s"ecific field
of stud$ .t contains general "rinci"al and facts 8hich e@"lains a "henomenon
Fe!t(%e&:
1 S3&te#!ti, .o+3 of 8no9$e+"e: management is a s$stematic bod$ of
)no8ledge consisting of general "rinci"les and techni/ues These hel" to
e@"lain events and serve as guidelines for managers in different t$"es of
organization
6 Uni'e%&!$ !44$i,!tion: scientific "rinci"les re"resent basic facts about and a
"articular field of en/uires These "rinci"les ma$ be a""lied in all situations
and at all times Management contains some fundamentals "rinci"les2 8hich
can be universall$ a""lied These "rinci"les are fle@ible and need to be
modified in different situations
? S,ientifi, en=(i%3 !n+ e:4e%i#ent: scientific "rinci"les and derived through
scientific investigation and reasoning So the$ can be e@"lained logicall$2
scientific "rinci"les are criticall$ tested Management "rinci"les are also
based on scientific en/uir$ and investigation These have been develo"ed
through "ractical and e@"erimental e@"erience of a large number of
managers
I C!(&e !n+ effe,t %e$!tion&)i4: "rinci"les of science la$ do8n a cause and
effect relationshi" bet8een related factorsH similarl$ the "rinci"les of
management establish cause and effect relationshi" bet8een different
variables
J Te&t of '!$i+it3 !n+ 4%e+i,t!.i$it3: validit$ of scientific "rinci"les can be
tested at an$ time and an$ number of times Ever$ time the test 8ill give the
same result
#rinci"les of science can also be tested for their validit$
Con,$(&ion:
Management is not a "erfect science li)e other "h$sical science such as
astronom$2 "h$sics2 chemistr$2 and biolog$ etc management deals 8ith "eo"le and
it is ver$ difficult to "redict their behavior accuratel$ so management is a &o,i!$
&,ien,e/
M!n!"e#ent !& ! 4%ofe&&ion:
- "rofession is a caving that re/uires s"ecialized )no8ledge and often long
intensive academic "re"arationC
Fe!t(%e&:
1 S4e,i!$i*e+ .o+3 of 8no9$e+"e: ever$ "rofession has a 8ell-defined bod$ of
)no8ledge relevant to the area of s"ecialization .n order to "ractice a
"rofession a "erson re/uires s"ecialized )no8ledge of its "rinci"les and
techni/ues There e@ists a substantiall$ and ra"idl$ e@"anding bod$ of
)no8ledge in management Toda$2 management is a se"arate disci"line
having a s"ecialized and organized bod$ of )no8ledge
6 Re&t%i,te+ ent%3: there e@ist institutions and universities to im"art education
and training for a "rofession !o one can enter a "rofession 8ithout going
through the "rescribe course of learning Man$ institutions have been set u"
8hich offer courses for s"ecialized training in management *ormal education
and training has become ver$ hel"ful in getting %obs as managers
? Se%'i,e #oti'e: a "rofession is a source of livelihood but "rofessional are
"rimaril$ motivated b$ the desire to serve the communit$ - "rofession
en%o$s communit$ sanction or res"ect - manager of a factor$ is res"onsible
not onl$ to its o8ners2 b$ the is also e@"ected to "roduce /ualit$ goods at
reasonable costs and to contribute to the 8ell being of the communit$
I Re4%e&ent!ti'e !&&o,i!tion: in ever$ "rofession there is a statutor$
association or institution2 8hich regulates that "rofession Managers have
formed certain associations for the regular e@change of )no8ledge and
e@"erience
J Co+e of ,on+(,t: members of one "rofession have to abide b$ a code of
conduct2 8hich contains rules and regulations "roviding the norms of honest$
integrit$ and "rofessional ethics The re"resentative association to ensure
self-disci"line among its members enforces the code of conduct -n$ member
violating the code can be "unished and his membershi" can be cancelled
Con,$(&ion:
Management fulfills several essentials of a "rofession but li)e other
"rofessions management does not restrict entr$ into managerial %obs2 to "eo"le 8ith
a s"ecial academic degree
O.<e,ti'e& of #!n!"e#ent !t ! "$!n,e
&i( Securing ma@imum results 8ith minimum efforts
&ii( Ma@imum "ros"erit$ for em"lo$er and em"lo$ee
&iii( 4uman better mere
&iv( Elimination of all t$"es of 8aste
&v( Economic gro8th
&vi( Social %ustice
I#4o%t!n,e of #!n!"e#ent !t "$!n,e:
1 -chievement of grou" goals
6 O"timum utilization of resources
? Minimization of cost
I Survival and gro8th of business
J Generation of em"lo$ment
K !ational develo"ment
OR
-ccording to Druc)er2 management is a d$namic and life-giving element of
ever$ business .n its absence the means of "roduction remain merel$ the means and
can never be the "roducers
7e )no8 that not onl$ in the field of business but in other fields also
management has come to occu"$ an im"ortant "lace .n this reference2 it is said that
Dan$thing minus management is nothingE
These are some to"ics2 8hich clearl$ highlight the im"ortance of
management

>/ A,)ie'in" 4%e+ete%#ine+ o.<e,ti'e&: each organization is
established 8ith certain aims Management is the onl$ "o8er and medium
8hich can hel" in the successful attainment of these aims - manager 8ith
the hel" of his e@"ertise and cleverness ma)es and assessment of the future
events and finall$ b$ his corrective action ma)es the im"ossible too) sim"le
?/ M!:i#(# (ti$i*!tion of %e&o(%,e& of 4%o+(,tion: management is
that "o8er 8hich b$ establishing an effective coordination bet8een the
various resources of "roduction ma)es an o"timum use of these resources
Most efficient use of the limited resources is the )e$ to the successful
business and thus this fact can be converted into realit$ 8ith the hel" of
management
@/ O'e%,o#in" ,o#4etition: these da$s business is not localized but
it has assumed national or even international dimensions Com"etition is
increasing da$ b$ da$ .n these com"etition da$s onl$ that organization can
survive 8hich can ma)e available to its customers the best /ualit$ of goods at
the chea"est rates Onl$ an efficient and clever manager can ma)e it a realit$
and save the re"utation of an organization
1/ Inte"%!tion 9it) ,)!n"in" en'i%on#ent: management is not onl$
limited to various internal function of an organization but it has to
com"romise 8ith the outer atmos"here also So man$ goods having modern
techni/ues are in the bazaar customers acce"t onl$ those "roducts 8hich are
chea" and the best 7ith the hel" of efficient and effective management a co-
ordination bet8een the ne8 and "revalent 8or) s$stem and methods can be
established to save the re"utation of an organization
A/ Re&e!%,) !n+ in'e&ti"!tion: a recent research has brought out the
fact that onl$ those com"anies or business enter"rises 8hich are constantl$
ta)ing interest in research activities are develo"ing ver$ fast
B/ In,%e!&e+ 4%ofit&/
C/ To #!int!in ! &o(n+ o%"!ni*!tion!$ &t%(,t(%e/
D/ F($fi$$in" t)e &o,i!$ %e&4on&i.i$it3: Sound management monitors
the environment of business and ma)es necessar$ changes in the business
"olicies and "ractices so as to )ee" the consumers and 8or)ers satisfied to
this 8a$ managerAs hel" an enter"rise to fulfill its obligation to8ards
different sections of societ$
E/ M!n!"e#ent #ini#i*e& %i&8&/
>F/ Re+(,e& ,o&t of 4%o+(,tion/
>>/ E,ono#i, "%o9t): Management is the catal$st of economic
gro8th2 develo"ment is a matter of human energies rather than of economic
gro8th and generation of human energies is the tas) of management
Management is the mover ad develo"ment in the conse/uence
>?/ St!.i$it3: management ensures the survival of an organisation in a
fast changing environment .t co-ordinates the activities of different
de"artments in an organization and maintains team s"irit amongst the
"ersonnel
>@/ 6(#!n +e'e$o4#ent: Management is not sim"l$ directions of
things but the develo"ment of men .t im"roves the "ersonalit$ and caliber of
"eo"le to raise their efficienc$ and "roductivit$ - good manager serves as a
friend and guide to his subordinates
>1/ Meet& t)e ,)!$$en"e of ,)!n"e: Management is a catal$tic force
that enables an organization to face the challenge of change The environment
of business has become ver$ turbulent Managers maintain a d$namic
e/uilibrium bet8een an enter"rise and its environment through innovation
and creativit$
MANAGEMENT AND ADMINISTRATION
On the basis of different o"inions of the e@"erts over the 8orld management
and administration2 there are three "revalent conce"tsC -
&i( A#e%i,!n ,on,e4t&: -dministration is a higher-level activit$ or s$stem
and management is lo8er
&ii( En"$i&) ,on,e4t&: management is the higher-level s$stem and it has more
"o8er than administration
&iii( Mo+e%n ,on,e4t&: -ccording to it2 management and administration are
s$non$mous .n the modern scientific age of management this is the most
"revalent and acce"ted conce"t of management and it ma)es no difference
bet8een management and administration
DIFFERENCE BETWEEN MANAGEMENT AND ADMINISTRATION:
S%/
No/
B!&i& of
+iffe%en,e
Administration Management
1 Meaning .t means the determination of
ob%ectives2 "lans and "olicies
of an enter"rise
Management is to translate
threats into o""ortunities
6 #ur"ose -dministration aims at
determining the ob%ectives
Management aims at
achieving "re-determined
ob%ectives
? !ature -dministration is a decision
ma)ing function
Management is an e@ecution
or doing function
I Decisions -dministration decides 8hat
is to be done and 8hen it is to
be done
Management decides 8ho 8ill
do the function and ho8 he
8ill do it2 8here he 8ill do it
J Sco"e The term administration is
a""licable at the to" level of
management
The term management is more
a""licable at middle level and
lo8er level of management
K Gsage The term administration is
generall$ used from business
organizations li)e govt2
offices2 colleges2 universities
etc
Management is generall$ used
8ith reference to business
enter"rises
: *eatures
affecting
decisions
-dministration decisions are
influenced b$ govt "olicies2
social and "olitical
circumstances and economic
additions
Management decisions are
mainl$ influenced b$ the
target of enter"rise
5 Relationshi" -dministration is related
mainl$ 8ith the o8ner and
to"-level managers
Management is related 8ith
the 8or)ers and em"lo$ers of
organization
L *unction .t is a determinative or
thin)ing function
.t is an e@ecutive or doing
function
19 Concerned .t is concerned 8ith
determination of ma%or ob%ect
and "olicies
.t concerned 8ith the
im"lementation of "olicies
11 ,evel .t is mainl$ to"-level
function
.t is largel$ a middle and
lo8er level function
16 .nfluence .ts services are influenced
mainl$ b$ "ublic o"inion and
other outside forces
Managerial decisions are
influenced mainl$ b$
ob%ectives and "olicies of
organization
1? Concerned .t is not directl$ concerned
8ith direction of human
efforts
.t is a activit$ concerned 8ith
directions of human efforts in
the e@ecutions of "lans
1I .nvolvement #lanning and controlling are
the main functions involved
in it
Directing and organizing are
main functions involved in it
1J S)ills Conce"tual and human s)ills
used eagerl$ in govt and
"ublic sector
Technical and human s)ills
used mainl$ in business
organization
1K Minister2 Commander2
Commissioner2 Registrar2 >ice
- Chancellor2 Governor etc
Managing director2 general
manager2 sales manager2
branch manager etc
LEVELS OF MANAGEMENT GMANAGERIAL 6IERARC6YH
T)e #!n!"e#ent $e'e$& #!3 .e ,$!&&ifie+ !& fo$$o9&:
&i( To" management
&ii( Middle management
&iii( Su"ervisor$ or o"erating management
To4 o% e:e,(ti'e #!n!"e#ent:
To" management refers to the managing at the highest level in the
management hierarch$ .t is the ultimate source of authorit$ .t is held res"onsible
for the general success or failure of the organization
To" management consists of the board of directors and the chief e@ecutive or
managing director the$ establish overall long-term goals and "lans of the
organization .t is their res"onsibilit$ to ensure success of the organization .t is
basicall$ an organ of overall revie8 and control Chief e@ecutive is concerned 8ith
the overall management of the com"an$As o"erations 4e maintains coordination
among different de"artments of the com"an$ 4e also )ee"s the organization in
harmon$ 8ith its e@ternal environment
Fe!t(%e&:
&i( To anal$se and inter"ret changes in e@ternal environment of the
com"an$
&ii( To establish long term cor"orate "lans
&iii( To formulate and a""rove the master budget and de"artmental
budgets
&iv( To design broad organization structure
&v( To a""oint de"artmental heads and )e$ e@ecutives
&vi( To coordinate and integrate the activities of different de"artments
and divisions of the com"an$
&vii( To "rovide overall direction and leadershi" to the com"an$
&viii( To e@ercise the overall revie8 and control of the financial and
o"erating results of the com"an$
&i@( To re"resent the com"an$ to the outside 8orld
&@( To decide the distribution of "rofits
Inte%#e+i!te #!n!"e#ent:
.ntermediate or u""er middle management com"rises de"artmental or
divisional heads
Eg 8or)s manager2 mar)eting manager2 finance manager etc
.t is also )no8n as de"artmental or functional management Ever$ divisional
head is the overall uncharged of one "articular division or de"artment 4e is
accountable for the "erformance of his division or de"artment to the chief e@ecutive
4e "erforms the usual managerial functions of "lanning2 organizing2 staffing2
directing and controlling in relation to one de"artment 4e coordinates and controls
the activities of all "ersonal 8or)ing in different branches of his de"artment
Mi++$e #!n!"e#ent:
Middle management consists of all sectional heads
Eg "lant manager2 area sales manager2 branch manager2 office manager etc
These e@ecutives serve as a lin) bet8een intermediate or to" management
and the o"erating management
F(n,tion:
&i( To inter"ret and e@"lain the "lans and "olicies formulated b$ to"
management
&ii( To control the o"erating "erformance
&iii( To coo"erate among themselves so as to integrate the various activities of
de"artment
&iv( To train2 motivate and develo" su"ervisor$ "ersonal
&v( To la$ do8n rules and regulations to be follo8ed b$ su"ervisor$
"ersonnel
S(4e%'i&o%3 o% o4e%!tin" o% fi%&t$ine #!n!"e#ent:
This is the lo8est level of management in an organization .t consists of
su"ervisors2 foremen2 sales officers2 and "urchase officers etc su"ervisors and
o"erating managers maintain close contacts 8ith ran) and file 8or)ers and
su"ervise da$-to-da$ o"erations The$ are concerned 8ith the mechanics of %obs
F(n,tion:
1 To "lan da$-to-da$ "roduction 8ith is the goals laid do8n b$ higher
authorities
6 To assign %obs to 8or)ers and to ma)e arrangements for their training and
develo"ment
? To issue orders and instructions
I To su"ervise and control 8or)ers o"erations and to maintain "ersonal
connection 8ith them
J To arrange material and tools is maintain machiner$
K To advice and assist 8or)ers b$ e@"laining 8or) "rocdures2 solving "roblems
etc
: To maintain disci"line and good human relations among 8or)ers
5 To re"ort feedbac) information and 8or)ers "roblems to the higher
authorities
CONCEPTS OF MANAGEMENT
G!H P%o,e&& of #!n!"e#ent: it includes si@ mAs
1 Men
6 Mone$
? Machine
I Material
J Mar)et
G.H A& ! 4%ofe&&ion:
Mou need "ro"er degree There are certain legal rules
SKILLS OF A MANAGER
.n order to have a "ro"er achievement of good and in order to have "lan to be
"ro"erl$ 8or)ed on a manager must have certain s)ills such asC -
G>H Con,e4t(!$ &8i$$& are s)ills related to the abilit$ to
visualize the organization as a 8hole2 discern interrelationshi"s among
organizational "arts2 and understand ho8 the organization fit into the 8ider conte@t
of the industr$2 communit$2 and 8orld Conce"tual s)ills are the s)ills managers
must have to thin) and to conce"tualize about abstract and com"le@ situations
Gsing these s)ills2 managers must be able to see the organization as a 8hole2
understand the relationshi"s among various submits2 and visualize ho8 the
organization fits into its broader environment
G?H Te,)ni,!$ &8i$$&: it is concerned 8ith the a""lication of
s)ill or )no8ledge ac/uired Management does not sim"l$ mean the )no8ledge of
"rinci"les of management rather it is its a""lication 8hich ma)es its effective
G@H 6(#!n &8i$$&: - manager should have #s$chological
)no8ledge 4e should able to deal 8ith different "ersons in different circumstances
G1H De,i&ion #!8in" &8i$$&: in crucial times a manager should
be able to have the abilit$ of ma)ing decisions These decisions must be effective
and "ractical in use as 8ell
MANAGEMENT AND SOCIAL RESPONSIBILTIES
FOR:
Manager should have social res"onsibilit$ for the "eo"le 'ecause manager is
a "erson 8ho is ver$ s)illed2 if he 8ill ta)e interest in the social functions or
"roblem2 it 8ill create a good im"ression on other "eo"le living or 8or)ing under
him it 8ill motivate the sub-ordinates 8or)ing under him Thus2 it creates a
favorable im"ression on the societ$2 8hich 8ill ultimatel$ hel"s the business
Managers have a creative and also communicative s)ill -s their main tas) is
to have the cordial relations 8ith "eo"le inside the organization or outside the
organization The$ had to interact 8ith his subordinates2 su"eriors and other
members relating to business
So2 the managers are ver$ creative and if the$ 8ill ta)e "art in social
"roblems2 the societ$ is bound to im"rove in some )ind or others Managers ta)e the
in"ut from the societ$ e/"/ education values etc if managers 8ill ta)e "art in social
event or the$ 8ill become res"onsible to8ards societ$2 the societ$ is sure to ma)e
"rogress become one man can change the 8hole environment .t 8ill thus create the
source of motivation to8ards the societ$ A,,o%+in" to S3&te# t)eo%37 for the
efficient 8or)ing and smooth 8or)ing small sub-s$stems should 8or) "ro"erl$
AGAINST:
The main function of the manager is to govern his organization smoothl$ and
efficientl$ So2 he should not ma)e himself res"onsible to8ards the societ$ 4e
should not be able to do his 8or) "ro"erl$ The social "roblem should be left for
those "eo"le So generall$ ta)e the res"onsibilit$ &"olitical "arties2 interest grou"s
etc( of im"roving are solving the "roblem of the societ$ Manager ta)es the salar$
for gobering his organizing "ro"erl$ not for solving the social "roblem of the
societ$ Thus2 manager should not move his mind to8ards social res"onsibilities of
the societ$
OR
There are man$ thin)ers 8ho have su""orted this2 but there are others 8ho have
e@"ressed their o"inion both sides are given as underC-
A%"(#ent& !"!in&t &o,i!$ %e&4on&i.i$it3:
Cont%!%3 to t)e o.<e,ti'e of .(&ine&&: <ust as the "rimar$ ob%ective of "la$ers in the
"la$-ground is to achieve victor$2 in the same 8a$ the chief ob%ective of business is
to enhance its "rofits b$ utilizing its2 resources
1 Ineffi,ien,3 in t)e &3&te#: there is no "o8er other than self-interest2
8hich can get 8or) out of "eo"le .t o8ners of business2 b$ ignoring self-interest2
start thin)ing of social res"onsibilit$ the 8hole 8or)-s$stem 8ill turn inefficient
6 Effe,t& of .(&ine&& '!$(e&: 'usiness should not have an$ social
res"onsibilit$ other8ise social values 8ill come to be dominated b$ business values2
8hich in itself is a "ainful delaminate .t means that 8hen business is alive to its
social res"onsibilit$2 the "eo"le in the beginning 8ill be so thoroughl$ im"ressed b$
it2 that in future business 8ill come to occu"$ a "osition of "redominance the idea
of social res"onsibilit$ of management o"inion against
? Conf$i,tin" ,on&i+e%!tion: - business manager 8ill be guided b$ t8o
considerations2 namel$2 "rivate mar)et mechanism and social res"onsibilities 8hich
are o""osite to each other
I A%.it%!%3 4o9e%: 'usiness managers 8ill get arbitrar$ "o8er in the
matter of allocation of resources in the 8elfare of the societ$ The$ should have no
right to interfere 8ith the e@ternal environment of business
J Di&%e"!%+ of #!%8etin" #e,)!ni&#: the doctrine of social
res"onsibilities im"lies acce"tance of socialist vie8 that "olitical mechanism rather
than mar)et mechanism is the a""ro"riate 8a$ to allocate scarce resources to
alternative uses
K B(%+en on ,(&to#e%: if the "rice in the mar)et for a "roduct does not
trul$ reflect the relative costs of "roducing mechanism of the mar)et "lace 8ill be
distorted The consumers 8ill have to "a$ higher costs
: Diffi,($t i#4$e#ent!tion: the conce"t of social res"onsibilit$ is ill
conceived and ill defined and is difficult to be im"lemented
A%"(#ent fo% &o,i!$ %e&4on&i.i$it3:
1 B(&ine&& i& ! 4!%t of &o,iet3: Since business organizations are a "art of
societ$ the$ must have a "ositive attitude to8ards the needs of societ$
'usiness is onl$ a sub-s$stem of societ$ and this sub-s$stem must
contribute to the 8elfare of the main s$stem
6 A'oi+!n,e of "o't/ %e"($!tion: .f business does not care of its social
res"onsibilit$2 the govt has to interfere increasingl$ in the business
s$stem2 8hich adversel$ affects the "rogress of business
? Lon" te%# &e$finte%e&t of .(&ine&&: the social res"onsibilit$ of business2
if ta)en care of in the "resent ensures the success of the organization in the
future
I Co+e of ,on+(,t: Members of a "rofession are bound to follo8 a code of
conduct Code of conduct includes rules connected 8ith "rofession2
honest$ and moralit$2 8hich form its base
J B(&ine&& i& ! ,%e!tion of t)e &o,iet3 !n+ &o it &)o($+ %e&4on+ to t)e
+e#!n+& of t)e &o,iet3: Since business uses the resources 8hich belong
to the societ$ .t is necessar$ that ever$ business are obliged to use the
social resources for the common good of societ$
K T)e $on"-te%# &e$f inte%e&t& of t)e .(&ine&& !%e .e&t &e%'e+ 9)en
.(&ine&& !&&(#e& &o,i!$ %e&4on&i.i$itie&: There is a gro8ing realization
on the "art of the enlightened businessmen that it is in their self-interest to
fulfill the demands and as"irations of the societ$ #eo"le 8ho have good
environment2 education2 and o""ortunit$ ma)e better em"lo$ees2
customers and neighbours for business than those 8ho are "oor2 ignorant
or o""ressed
: It i& t)e #o%!$ !n+ %i")t t)in" to +oC .t is 8idel$ agreed that
businessmen toda$ have considerable social "o8er This "o8er is virtuall$
granted to them b$ the societ$2 8hich must have a general relationshi"
8ith social res"onsibilities The social res"onsibilities of businessmen
must be "ro"ortionate to their social "o8er .f the businessmen do not
assume social res"onsibilities2 their social "o8er must be ta)en a8a$ b$
the societ$ through government controls and regulations and other
measures
5 P(.$i, i#!"e of .(&ine&& 9o($+ .e i#4%o'e+C The business 8ill retain
the needed credibilit$ 8ith the "ublic if it "erforms its social obligations
.t 8ill also avoid conflict 8ith the societ$ in its o8n interest Good
relation 8ith the 8or)ers2 consumers and su""liers 8ill lead to success of
business
L T)e ,on&(#e%& !%e 9e$$ info%#e+C The$ e@"ect higher /ualit$ "roducts
at res"onsible rates .f the$ donAt get fair treatment form business2 the$
8ill organize themselves and com"el the business its social
res"onsibilities
MANAGERIAL SKILLS:
1 P$!nnin" &8i$$&: the manager must "asses the s)ills of thin)ing the s)ills of
anal$zing the environment2 it includes 8hat is ha""ening in the societ$
organization and "olitical s$stem 4e must be able to assess or guess the
changes in environment2 traits offered b$ the changes in environment 4e
must be able to match t8o sets of environment on the basis of e@ternal and
internal anal$sis
6 O%"!ni*in" &8i$$&: organizing s)ill is needed to s"ecif$ 8ho 8ill achieve
8hat and ho8 manager must be in a "osition of identification of s"ecific
activities and s"ecific %obs - manager must be clear about grou"ing of
various %obs2 s"an of management2 t$"e of relationshi" to be established
bet8een various "eo"le and various %obs
? Le!+in" &8i$$: leadershi" is the abilit$ of individual to influence the "eo"le
Recognition of human factor is also included in leading s)ill of human factor
various leadershi" trac) li)e communication and motivation are also included
in the leadershi" s)ills
I Te,)ni,!$ &8i$$&: technical s)ills refer to the abilit$ and )no8ledge in using
the e/ui"ment2 techni/ues and "rocedures involved in "erforming s"ecific
tas)s These s)ills re/uire s"ecialized )no8ledge and "roficienc$ in
mechanics of a "articular %ob - manager must )no8 8hich s)ills should be
em"lo$ed in his "articular enter"rise and be familiar enough 8ith their
"otentialit$ to as) discerning /uestion of his technical advisors
J 6(#!n &8i$$&: human s)ills consist of the abilit$ to 8or) effectivel$ 8ith
other "eo"le These are re/uired to 8in co-o"eration of others and to build
effective 8or) teams 4uman s)ills are reflected in the 8a$ a manager
"erceives his su"eriors2 subordinates and "eers -n a8areness of the
im"ortance of human s)ills should be "art of managerAs orientation
K Con,e4t(!$ &8i$$&: conce"tual s)ills com"rise the abilit$ to see 8hole
organization and interrelationshi"s bet8een its "arts These s)ills refer to the
abilit$ to visualize the entire "icture or to consider a situation in its totalit$
Such s)ills hel" the manager to anal$se the forces 8or)ing in a situation and
to ta)e a broad and foresighted vie8 of the organization
: Di!"no&ti, &8i$$&: it includes the abilit$ to determine b$ anal$zing and
e@amination2 the nature and circumstances of a "articular condition .t is not
onl$ the abilit$ to s"ecif$ 8h$ something ha""ened but also the abilit$ to
develo" certain "ossible outcomes .t is the abilit$ to it through unim"ortant
as"ects and /uic)l$ gets though the heart of "roblem
5 Cont%o$$in" &8i$$: there are certain standards2 8hich are fi@ed in a 8a$ such
that accom"lishment of those standards leads to the accom"lishment of goals
- manager must )ee" chec) on the activities of subordinates and must rectif$
them if there are an$ "roblems
L De,i&ion #!8in" &8i$$&: there are t8o t$"es of decisions to be ta)en b$ the
manager
&i( Routine and "rogram decision
&ii( !on-routine and non-"rogram decisions
T)e ,o(%&e of !,tion to .e fo$$o9e+ i& !& (n+e%:
1 The manager must be in a "osition to identif$ the "roblem
6 Reaching to the main cause or the "roblem
? Searching for the alternative solution
I Com"aring merits and demerits of each solution
J Selecting the best course of action
K *ormulating the "lan b$ the a""lication of the alternatives
Responsibilities of mn!e"#
Re&4on&i.i$it3 to9!%+& &(44$ie%&: "eo"le 8ho su""l$ ra8 material2 mechanical
com"onents2 financial institutions and advertising agencies .t is the dut$ or sa$s
res"onsibilit$ of the manager that the su""liers are being "aid at the time
1 Re&4on&i.i$it3 to9!%+& +i&t%i.(to%&: it is the res"onsibilit$ of the manager
to chec) regular su""l$ of the "roduct #roduct must be chec)ed for the
/ualit$2 "ac)aging &as in the case of children "ac)aging "la$s a ver$
im"ortant role( There must be free testing of goods that is distribution of
sam"les There should be fair return on investment that is fair commission
must be "aid To motivate them the organisation must re8ard them2 credit
facilities must be made available to the middle class "eo"le etc
Yo( ,!n &(%'i'e in t)e 'e&t 9!3 if t)e in+(&t%3 9i$$ &(%'i'e:
a. You can take the advantage by showing collectiveness.
b Com"iling 8ith the norms la$ do8n b$ the association
c #roviding correct information to organisation
d Sharing latest )no8ledge
e Su""orting the individual members of the association
f .ndulging in fair and ethical com"etition
g !ot using an$ "olitical or other strategies
6 Re&4on&i.i$it3 to9!%+& (nion: em"lo$ees union is recognized as the enem$
of the organisation
? Re&4on&i.i$it3 to9!%+& "o't/: 'irth gro8th and death of an$ organisation
8ill generate according to statuar$ "rovisions and these 8ill be governed b$
the government of the organisation and this can be done b$
&i( Sending the correct information
&ii( Ta@es and duties must be "aid regularl$
&iii( Organisation must tr$ to o"erate as a model citizen
&iv( Organisation must not tr$ to damage the culture of that area
and must tr$ to maintain the rich culture of that area
1/ Re&4on&i.i$it3 to9!%+& ,(&to#e%&:
A/ Re&4on&i.i$it3 to9!%+& &o,iet3:
B/ Re&4on&i.i$it3 to9!%+& ,o#4etito%&:
C/ Re&4on&i.i$it3 to9!%+& 9o%8e%&:
D/ Re&4on&i.i$it3 to9!%+& &)!%e)o$+e%& o% o9ne%&:
Ro$e& of ! #!n!"e%:
There are different t$"es of managerial roles some of them are given belo8C
Mint*.e%"2&
M!n!"e%i!$ Ro$e&
Ro$e De&,%i4tion
E:!#4$e& of
I+entifi!.$e
A,ti'itie& Inte%4e%&on!$
Fi"(%e)e!+
S$mbolic headC obliged
to
"erform a number of
routine duties of a legal
Greeting visitorsC signing
legal documents
Le!+e% Res"onsible for the
motivation of
subordinatesC
res"onsible
#erforming virtuall$ all
activities that
involve
subordinates
Li!i&on Maintains self-
develo"ed
net8or) of outside
contacts and
informers 8ho
-c)no8ledging mailC
doing
e@ternal board 8or)C
"erforming other activities
that involve outsiders
Info%#!tion!$ Monito% See)s and receives
8ide
variet$ of internal and
e@ternal
information to
develo"
thorough
Reading "eriodicals and
re"ortsC maintaining
"ersonal contacts
Di&&e#in!to% Transmits
information
received from outsiders
or from
4olding
informational
meetingsC ma)ing "hone
calls to rela$ information
S4o8e&4e%&on Transmits information
to
outsiders on
organizationAs
"lans2 "olicies2
4olding board meetingsC
giving information to
the
media
De,i&ion!$ Ent%e4%ene(% Searches organization
and
its environment for
o""ortunities and
initiates Dim"rovement
Organizing strateg$ and
revie8 sessions to
develo" ne8 "rograms
Di&t(%.!n,e
)!n+$e%
Res"onsible for
corrective
action 8hen
organization faces
Organizing strateg$ and
revie8 sessions that
involve disturbances and
crises
Re&o(%,e
!$$o,!to%
Res"onsible for the
allocation of
organizational resources
of all )inds ma)ing or
a""roving all significant
organizational decisions
SchedulingC
re/uesting
authorizationC
"erforming
an$ activit$ that involves
Ne"oti!to% Res"onsible for
re"resenting the
organization at ma%or
negotiations
#artici"ating in union
contract negotiations
I#4o%t!n,e of M!n!"e#ent
Management is the d$namic life giving element in ever$ business 7ithout
it the resources of "roduction remain resources and never become "roduction
Sound Management "rovides the follo8ing benefits
1 -chievement of grou" goals
6 O"timum utilization of resources
? *ulfillment of social obligations
I Economic gro8th
J Stabilit$
K 4uman Develo"ment
: Meets the challenge of change
Nee+ fo% M!n!"e#ent
1 To increase efficienc$
6 To cr$stallize the nature of Mgt %ob
? To im"rove research in Mgt
I To attain social goals
CONTRIBUTIONS OF TAYLOR AND FAYOL
A+#ini&t%!ti'e t)eo%3:
F!3o$ G>D1>>E?AH F(n,tion& !n+ P%in,i4$e& of M!n!"e#ent
4enri *a$ol2 a *rench engineer and director of mines2 8as little un)no8n
outside *rance until the late I9s 8hen Constance Storrs "ublished her
translation of *a$ol3s 1L1K D-dministration .ndustrielle et Generale N
*a$ol3s career began as a mining engineer 4e then moved into research geolog$
and in 1555 %oined2 Comambault as Director Comambault 8as in difficult$ but
*a$ol turned the o"eration round On retirement he "ublished his 8or) - a
com"rehensive theor$ of administration - described and classified administrative
management roles and "rocesses then became recognized and referenced b$ others
in the gro8ing discourse about management 4e is fre/uentl$ seen as a )e$2 earl$
contributor to a classical or administrative management school of thought &even
though he himself 8ould never have recognized such a NschoolN(
4is theorizing about administration 8as built on "ersonal observation and
e@"erience of 8hat 8or)ed 8ell in terms of organization 4is as"iration for an
Nadministrative scienceN sought a consistent set of "rinci"les that all organizations
must a""l$ in order to run "ro"erl$
* 7 Ta$lor "ublished NThe #rinci"les of Scientific ManagementN in the GS- in
1L112 and *a$ol in 1L1K e@amined the nature of management and administration on
the basis of his *rench mining organization e@"eriences
*a$ol s$nthesized various tenets or "rinci"les of organization and management and
Ta$lor on 8or) methods2 measurement and sim"lification to secure efficiencies
'oth referenced functional s"ecialization
'oth *a$ol and Ta$lor 8ere arguing that "rinci"les e@isted 8hich all organizations -
in order to o"erate and be administered efficientl$ - could im"lement This t$"e of
assertion t$"ifies a None best 8a$N a""roach to management thin)ing
*a$ol3s five functions are still relevant to discussion toda$ about management
roles and action
1 to fo%e,!&t !n+ 4$!n 4(%'e3!n,e
e@amine the future and dra8 u" "lans of action
6 to o%"!ni*e
build u" the structure2 material and human of the underta)ing
? to ,o##!n+
maintain activit$ among the "ersonnel
I to ,oo%+in!te
bind together2 unif$ and harmonies activit$ and effort
J to ,ont%o$
see that ever$thing occurs in conformit$ 8ith "olic$ and
"ractice
C$!&&ifi,!tion of B(&ine&& A,ti'itie&
-ccording to *a$ol all activities of a business enter"rise could be divided into si@
grou"sC
Technical &#roduction or manufacturing(
Commercial &'u$ing2 selling and e@change(
*inancial &Search for and o"timum use of ca"ital(
Securit$ &#rotection of "ro"ert$ and "ersons(
-ccounting &Record )ee"ing2 costing2 statistics(
Managerial &#lanning2 organizing2 commanding2 coordinating and
controlling(
F!3o$ !$&o &3nt)e&i*e+ >1 4%in,i4$e& fo% o%"!ni*!tion!$ +e&i"n !n+ effe,ti'e
!+#ini&t%!tion/ .t is 8orth8hile reflecting on these are com"aring the conclusions
to contem"orar$ utterances b$ #eters2 =anter and 4and$ to name but three
management gurus
*a$ol3s 1I "rinci"les areC
S4e,i!$i*!tionI +i'i&ion of $!.o%
- "rinci"le of 8or) allocation and s"ecialization in order to
concentrate activities to enable s"ecialization of s)ills and
understandings2 more 8or) focus and efficienc$
A(t)o%it3 9it) ,o%%e&4on+in" %e&4on&i.i$it3C
.f res"onsibilities are allocated then the "ost holder needs the
re/uisite authorit$ to carr$ these out including the right to
re/uire others in the area of res"onsibilit$ to underta)e duties
-uthorit$ stems fromC
that ascribed from the delegation "rocess &the %ob holder
is assigned to act as the agent of the high authorit$ to
8hom the$ re"ort - hierarch$(
-llocation and "ermission to use the necessar$ resources
needed &budgets2 assets2 and staff( to carr$ out the
res"onsibilities
Selection - the "erson has the e@"ertise to carr$ out the
res"onsibilities and the "ersonal /ualities to 8in the
su""ort and confidence of others
The R J A corres"ondence is im"ortant to understand R J A
enables accountabilit$ in the delegation "rocess 7ho do 8e
co"e 8ith situations 8here R K AB -re there 8or) situations
8here our RL AB
N<udgment demands high moral character2 therefore2 a good
leader should "ossess and infuse into those around him courage
to acce"t res"onsibilit$ The best safeguard against abuse of
authorit$ and 8ea)ness on the "art of a higher manager is
"ersonal integrit$ and "articularl$ high moral character of such
a manager This integrit$ is conferred neither b$ election nor
o8nershi" D1L1K
- manager should never be given authorit$ 8ithout
res"onsibilit$--and also should never be given res"onsibilit$
8ithout the associated authorit$ to get the 8or) done
Di&,i4$ine
The generalization about disci"line is that disci"line is essential
for the smooth running of a business and 8ithout it - standards2
consistenc$ of action2 adherence to rules and values - no
enter"rise could "ros"er
Nin an essence - obedience2 a""lication2 energ$2 behavior and
out8ard mar)s of res"ect observed in accordance 8ith standing
agreements bet8een firms and its em"lo$ees N 1L1K
Unit3 of ,o##!n+
The idea is that an em"lo$ee should receive instructions from
one su"erior onl$ This generalization still holds - even 8here
8e are involved 8ith team and matri@ structures 8hich involve
re"orting to more than one boss - or being accountable to
several clients The basic concern is that tensions and dilemmas
arise 8here 8e re"ort to t8o or more bosses One boss ma$
8ant O2 the other M and the subordinate is caught bet8een the
devil and the dee" blue sea
Unit3 of +i%e,tion
The unit$ of command idea of having one head &chief
e@ecutive2 cabinet consensus 8ith agree "ur"oses and
ob%ectives and one "lan for a grou" of activities( is clear
S(.o%+in!tion of in+i'i+(!$ inte%e&t to t)e "ene%!$ inte%e&t
*a$ol3s line 8as that one em"lo$ee3s interests or those of one
grou" should not "revail over the organization as a 8hole This
8ould s"ar) a livel$ debate about 8ho decides that the interests
of the organization as a 8hole are Ethical dilemmas and
matters of cor"orate ris) and the behavior of individual
NchancresN are involved here *a$ol3s 8or) - assumes a shared
set of values b$ "eo"le in the organization - a unitar$ 8here the
reasons for organizational activities and decisions are in some
8a$ neutral and reasonable
%e#(ne%!tion of &t!ff
DThe "rice of services rendered N 1L1K
The general "rinci"le is that levels of com"ensation should be
NfairN and as far as "ossible afford satisfaction both to the staff
and the firm &in terms of its cost structures and desire for
"rofitabilit$+sur"lus(
Cent%!$i*!tion
Centralization for 4* is essential to the organization and a
natural conse/uence of organizing This issue does not go a8a$
even 8here flatter2 devolved organizations occur
Decentralization - is fre/uentl$ centralized-decentralizationPPP
The modes of control over the actions and results of devolved
organizations are still matters re/uiring considerable attention
S,!$!% ,)!inI$ine of !(t)o%it3
The scalar chain of command of re"orting relationshi"s from
to" e@ecutive to the ordinar$ sho" o"erative or driver needs to
be sensible2 clear and understood
O%+e%
The level of generalization becomes difficult 8ith this
"rinci"le 'asicall$ an organization NshouldN "rovide an orderl$
"lace for each individual member - 8ho needs to see ho8 their
role fits into the organization and be confident2 able to "redict
the organizations behavior to8ards them Thus "olicies2 rules2
instructions and actions should be understandable and
understood Orderliness im"lies stead$ evolutionar$ movement
rather than 8ild2 an@iet$ "rovo)ing2 un"redictable movement
E=(it3
E/uit$2 fairness and a sense of %ustice NshouldE "ervade the
organization - in "rinci"le and "ractice
St!.i$it3 of ten(%e
Time is needed for the em"lo$ee to ada"t to his+her 8or) and
"erform it effectivel$ Stabilit$ of tenure "romotes lo$alt$ to
the organization2 its "ur"oses and values
Initi!ti'e
-t all levels of the organizational structure2 zealH enthusiasm
and energ$ are enabled b$ "eo"le having the sco"e for "ersonal
initiative &!oteC Tom #eters recommendations in res"ect of
em"lo$ee em"o8erment(
E&4%it +e ,o%4&
4ere *a$ol em"hasizes the need for building and maintaining
of harmon$ among the 8or) force2 team 8or) and sound
inter"ersonal relationshi"s
.n the same 8a$ that -lfred # Sloan2 the e@ecutive head of General Motors
reorganized the com"an$ into semi-autonomous divisions in the 1L69s2 cor"orations
undergoing reorganization still a""l$ Nclassical organizationN "rinci"les - ver$ much
in line 8ith *a$ol3s recommendations
C%iti,!$ E'!$(!tion
1 Too formal
6 !ot "a$ ade/uate attention to 8or)ers
? >agueness
I 4is "rinci"le hinted but did not elaborate that mgt can and should be
taught
- Des"ite these limitations2 *a$ol made a uni/ue and outstanding
contribution to Mgt theor$
S,ientifi, M!n!"e#ent
F!t)e% of S,ientifi, M!n!"e#ent F/W/ T!3$o% G>DAB ->E>BH
*7 Ta$lor scientific management means managing the affairs of an
organisation scientificall$ in contrast to the rule of thumb a""roach
-ccording to him2 scientific management is the art of )no8ing e@actl$ 8hat
$ou 8ant men to do and then that the$ do it in the best and chea"est 8a$
4e is regarded as the father of scientific management2 the main ob%ective of
scientific management 8as to eliminate 8astage and increase the all round
efficienc$ in the 8or)ing of the organisation
4e 8as the first "erson 8ho insisted on the introduction of scientific methods
in management 4e launched a ne8 movement in 1LJJ2 8hich is )no8n as
Fscientific managementA That is 8h$H Ta$lor is regarded as the father of scientific
management
4e 8as born in 15JK in #hiladel"hia2 GS- he started his career as an
a""rentice in a small machine ma)ing sho" in 15:9 and rose to the "osition of chief
engineer of Midvale Steel 8or)s in 155I at the age of 65 Ta$lor conducted a series
of e@"eriments over a "eriod of more than t8o decades 4e e@"erimented 8ith
machine tools2 s"eed metals and the li)e One of his e@"eriments led to the
discover$ of high-s"eed steel2 8hich made him ver$ "o"ular Other e@"eriments
related to the 8a$ men handled materials2 machines and tools 8hich led him to the
develo"ment of a coordinated s$stem of sho" management .n short2 he
e@"erimented in different fields to eliminate 8astage of all t$"es2 increase the
efficienc$ of 8or)ers and "rovide for functional management
Ta$lor 8as a man of strong 8ill and convictions2 he 8anted to a""l$
scientific reasoning to management -fter leaving Midvale Steel 7or)s2 he %oined
'ethlehem Steel Com"an$ 8here he introduced scientific management 4e 8as
highl$ o""osed b$ the management and the 8or)ers and his services 8ere
terminated unceremoniousl$ in 1L91 Ta$lor "resented his first "a"er entitled DSho"
managementE 8as "ublished in 1L9?H it focused attention on his "hiloso"h$ on
management 4is famous boo) D"rinci"les and methods of scientific managementE
8as "ublished in 1L11 and his other contribution 8as Dtestimon$ before the s"ecial
house committeeE 8hich 8as given in 1L16 it ma$ be "ointed out that the last t8o
8or)s 8ere combined in one boo) entitled Fscientific managementA in 1LI: b$
4ar"er and 'rothers

T!3$o%2& 4%in,i4$e& of #!n!"e#ent:
Ta$lor develo"ed a number of "rinci"les of scientific management
1 S,ien,e7 not t)e %($e of t)(#.: according to this "rinci"le scientific
methods should be develo"ed and used to "erform each %ob and %ob should
not be done as a rule of thumb2 8e should thin) before doing *or this
"ur"ose first normal time re/uired to "erform a %ob should be determined
Secondl$ fair da$s 8or) of the 8or)man be determined Thirdl$ the best 8a$
of doing the 8or) and a last maintaining standard 8or)ing conditions and
"roviding standard tools and e/ui"ments
6 C$o&e ,oo4e%!tion .et9een 9o%8e%& !n+ #!n!"e#ent G,oo4e%!tion7 not
in+i'i+(!$i&#H: according to this "rinci"le ob%ectives of organisation can
onl$ be achieved b$ close coo"eration bet8een all the 8or)ers and all the
levels of management in an organisation and each su"erior and subordinate
should coo"erate each other to achieve the common ob%ective of the
organisation
? S,ientifi, &e$e,tion7 t%!inin" of t)e 9o%8e%&: this "rinci"le suggests that
s)ills and e@"erience of the 8or)ers must be "ro"erl$ matched 8ith the %obs2
8hich the$ have "erformed So selection should be based on tests and
intervie8s in s"ecified field2 training be given if re/uired and their
ca"abilities should be develo"ed to the ma@imum
I Di'i&ion of 9o%8 !n+ %e&4on&i.i$it3 G&e4!%!tion of 4$!nnin" !n+
o4e%!tion!$ 9o%8&H: there should be clear-cut division of 8or) and
res"onsibilit$ bet8een 8or) and management E/"/ "lanning is the 8or) of
management and so managers should be res"onsible for the "ro"er "lanning
8here as e@ecution of "lan is the 8or) of 8or)ers and so 8or)er should be
res"onsible for "ro"er e@ecution of "lanning
J Ment!$ %e'o$(tion G)!%#on3H: in an organisation the "ersonnelAs &"ersons
8ho are 8or)ing on an organisation( should be made mentall$ "re"ared to
"erform the activities assigned to them So management should create
suitable 8or)ing condition and resolve all "roblems scientificall$ and the
8or)ers should "erform their %ob devotedl$ and use the resources efficientl$
K M!:i#(# 4%o&4e%it3 fo% e#4$o3e%& !n+ e#4$o3ee&: this "rinci"le re/uires
that the aim of management should be to secure ma@imum "ros"erit$ for the
em"lo$ers along 8ith the ma@imum 8elfare of em"lo$ees
C%iti,i&# of &,ientifi, #!n!"e#ent:
Ta$lorAs 8or) 8as criticised on the follo8ing groundsC
1 The use of the 8ord FscientificA before FmanagementA 8as ob%ected
because 8hat is actuall$ meant be scientific management is nothing but a
scientific a""roach to management
6 .t 8as argued that the "rinci"les of scientific management as advocated
b$ Ta$lor 8ere confined mostl$ to "roduction management 4e ignored
certain other essential as"ects of management li)e finance2 mar)eting2
accounting and "ersonnel
? Ta$lor advocated the conce"t of functional foremanshi" to bring about
s"ecialization in the organisation 'ut this is not feasible in "ractice as it
violates the "rinci"le of unit$ of command
I Trade unionists regarded the "rinci"les of scientific management as the
means to e@"loit labour because the 8ages of the 8or)ers 8ere not increased
in direct "ro"ortion to "roductivit$ increases
J Scientific management is based on the assum"tion that "eo"le are
motivated b$ material gains Ta$lor and his associated concentrated on
"h$sical and economic needs and over-loo)ed the social and ego needs of
"eo"le ,ater e@"erience has revealed that financial gain is not the onl$ thing
that matters 7or)ers also 8ant %ob satisfaction2 "artici"ation and
recognition
K Scientific management is /uite limited in sco"e .t focused attention
com"letel$ on efficienc$ at the sho" floor -s a conse/uence management
became the stud$ of sho" management 8hile the more general as"ects 8ere
overloo)ed Scientific management has thus been described as a theor$ of
industrial engineering
: In,%e!&e in 9o%8 &4ee+: in scientific management the 8or)ers are
su""osed to 8or) 8ith more s"eed2 8hich affects their health
5 no ,)!n,e to &)o9 &8i$$: in scientific management 8or)ers are
su""osed to 8or) according one schedule and no thought is given to "ersonal
8ithin and s)ill
L Monotono(& 9o%8: the 8or)ers are su""oses co 8or) onl$ the
s"ecified "ortion of 8or) continuousl$ for man$ $ears the same 8or) for
man$ $ears ma)e the 8or) monotonous
19 L!,8 of initi!ti'e: no chance is left to sho8 their abilit$ onl$ a
mechanized "rocess of 8or) is follo8ed
11 L!,8 of e#4$o3#ent o44o%t(nitie&: more 8or) b$ lesser 8or)er thus
reduces the chance of more em"lo$ment
16 E:4$oit!tion: 8or)ers are not given their due shares in the gains
due to increased "roductivit$ of the enter"rise Com"arativel$2 less efficient
8or)ers 8ho are failed to achieve the standard are "enalized
8ages do not rise in the same "ro"ortion in 8hich "roductivit$ of labour
increases
1? We!8ne&& of t%!+e (nioni&#: scientific management reduces the role
of trade unions as standards of out"uts2 8ages and 8or)ing conditions are
determined on scientific bases There is little sco"e of bargaining on this
ratter The differential "iece-8age divides the 8or)er into efficient and
inefficient Scientific management ma$ lead to accurac$2 as 8or)ers have
to carr$ out the instructions of their functional basis .t cuts the roots of trade
union movement
OR
1 S4ee+in" (4 of 9o%8e%&: 8or)ers feel that scientific management is nothing
but a device to force 8or)ers to a greater s"eed2 8ithout much regard for their
health and safet$ .t creates a lot of "h$sical and mental strain on them
6 Lo&& of 9o%8e%& &8i$$ !n+ initi!ti'e: he 8or)ers had to 8or) according to
the instructions of the foreman This leads to loss of initiative from the
8or)ers and the$ cannot suggest better method of 8or) The$ further allege
and too much of standardization2 a "re-re/uisite for scientific term2 due to
loss of 8or)ers initiative it results into lo8er "roductivit$
? Monoton3: under this function of "lanning is se"arated from that of doing
Ever$ 8or)er is e@"ected to "erform his small "art of a %ob due to
s"ecialization This ma)es the 8or) monotonous and 8or)er lends to lose
interest in his %ob
I Une#4$o3#ent: Scientific management reduces the number of "rocesses and
motions of 8or)ers2 increases the hourl$ or dail$ out"ut "er 8or)er2 increases
their efficienc$ b$ standardization and decision of labour2 thereb$2 it creates
unem"lo$ment b$ re/uiring lesser number of 8or)ers
J E:4$oit!tion of 9o%8e%&: the 8or)ers feel that gains increased "rofit is ta)en
a8a$ b$ investors and onl$ insignificant benefit is given to the 8or)ers b$
8a$ of increase in 8ages and bonus
K Di&,%i#in!tion .et9een 9o%8e%&: under this2 efficient 8or)ers get more
8ages as com"ared to the inefficient ones due to the differental 8age
incentive scheme
: Un+e#o,%!ti, in n!t(%e: 8or)ers ob%ect that scientific management is
undemocratic in nature as it gives absolute control over 8or)ers to the
functional bosses The 8or)ers have to follo8 the instruction of the bosses
8ithout thin)ing on the "art of the 8or)ers
5 Un&(it!.$e fo% &#!$$&,!$e (nit: some em"lo$ers are of the o"inion that
scientific management is onl$ suitable for large-scale units Small-scale units
cannot afford to introduce the scheme of scientific management
Te,)ni=(e& o% e$e#ent& of &,ientifi, #!n!"e#ent:
1 F(n,tion!$ fo%e#!n&)i4: Ta$lor believed that a single foreman might not be
com"etent to su"ervise all functional matters *unctional foremanshi"
involves su"ervision of a 8or)er b$ several s"ecialist foremen So this
conce"t is o""osite of the "rinci"le of unit$ of command E/"/ matter relating
to the s"eed of 8or) of a 8or)er should be su"ervised b$ s"eed su"ervisor
and re"air and /uantit$ there of should be su"ervised b$ the re"air su"ervisor
6 St!n+!%+i*!tion of 9o%8: according to this techni/ue standards should be
fi@ed at ever$ level So that the %obs can be "erformed efficientl$ E/"/
standard tools and e/ui"ments should be "rovided to the 8or)ers Standard
8or)ing conditions are "rovided at 8or) "lace Standard2 size2 /ualit$2
8eights and other measures should be fi@ed Standard time re/uired
"erforming a unit of %ob and standard 8or)ing hours of a fair da$ Standard
"erformance of machines in a standard time
? Si#4$ifi,!tion of 9o%8: the 8or) should be sim"lified in a 8a$ so that an
average 8or)er can easil$ understand the ste"s to be "erformed to do a
s"ecified %ob Sim"lification 8ill certainl$ im"rove the efficienc$ resulting
more "roduction and reduction in cost and 8astages
I F!ti"(e &t(+3: according to this techni/ue management should determined
the amount and fre/uenc$ of rest intervals in com"leting a tas) 'ecause
human being is bound to feel tired if 8or)s 8ithout rest interval for a long
"eriod and after getting tired he 8ill not be able to "erform the %ob 8ith full
ca"acit$ 'ut b$ rest he 8ill regain stamina
J Met)o+ &t(+3: there ma$ be various methods to "erform a %ob 8ith different
cost re/uirements So the organisation should tr$ to find out the best 8a$ to
"erform the tas) E/"/ shoes ma$ be manufactured manuall$ or b$ machines2
8hich ever costs less be ado"ted
K Defe%enti!$ 9!"e &3&te#: in this techni/ue Ta$lor suggested that differential
8age s$stem for the 8ages to the em"lo$ees on the basis of their "erformance
should be introduced 8hich 8ill develo" the idea+conce"t Ddo more to earn
moreE The inefficient 8or)er 8ill also tr$ to do to the ma@imum of his
ca"acit$ and so the habit of doing the best and more in an efficient manner is
develo"
: Ment!$ %e'o$(tion: 8or)ing of the subordinate and su"erior is based on
8hether the$ are mentall$ "re"are for doing the %ob or not - "ositive attitude
of both to8ards each other each necessar$ there must be an environment in an
organisation in 8hich the 8or)ers feel that the management is e@"loiting
them On the other hand management also should have no conce"t that the
8or)ers have a tendenc$ of miss use of tools and e/ui"ments2 resulting
8astages
5 Ti#e &t(+3: time stud$ is a techni/ue2 8hich is used to measure+determine
the time that ma$ be ta)en b$ 8or)men of average s)ills+abilit$ to "erform a
%ob+tas) #ur"ose of time stud$ is to determine standard time re/uired to
"erform a s"ecified %ob and so fair da$s 8or)+8or)man Time stud$ is
conducted 8ith the hel" of sto"8atch
L Motion &t(+3: motion stud$ is a techni/ue2 8hich involves close observation
of movements of bod$ and lim"s re/uired to "erform a %ob .ts "ur"ose is to
determine the best 8a$ of doing a %ob b$ eliminating the 8asteful motion2
8hich 8ill further reduce the fatigue resulting im"rovement in efficienc$
Micro chronometer is the tool of stud$
C%iti,!$ E'!$(!tion
Ta$lorAs ideas caught the imagination of several individuals and
organizations in the GS- and Euro"e Scientific management led to tremendous
increase in "roductivit$ and 8ages 4o8ever his scientific a""roach to ever$ as"ect
of management created sus"icion in the minds of 8or)ers and trade unions The$
feared that 8or)ing harder and faster might eventuall$ lead to e@haustion of all
available %obs and retrenchment Scientific management has been criticized on the
follo8ing groundsC
i Me,)!ni&ti, A44%o!,): The main criticism is that scientific management
ignores the human element in "roduction and is devoid of a human touch .t
treats 8or)ers as factors of "roduction and not as human beings Too much
em"hasis is "laced on technical as"ects of 8or) ignoring the human side
Therefore Ta$lor and his associates 8ere ridiculed as efficienc$ e@"erts and
time stud$ anal$sis
ii Un%e!$i&ti, A&&(#4tion&: Scientific Management is based on the assum"tion
that "eo"le are rational and the$ are motivated b$ material gains Ta$lor and
his associates concentrated on "h$sical and economic needs and overloo)ed
the social and ego needs of "eo"le ,atter e@"erience has revealed that
financial gain is not the onl$ things that matter 7or)ers also 8ant %ob
satisfaction2 "artici"ation and recognition
iii N!%%o9 Vie9: Scientific management is /uite limited in sco"e Ta$lor
focused attention com"letel$ on efficienc$ at the sho" floor -s a
conse/uence management became the stud$ of sho" management 8hile the
more general as"ects 8ere overloo)ed Scientific management has thus been
described2 as a theor$ of industrial engineering .t does not 8ith management
of the total organization
iv I#4%!,ti,!.$e: Man$ ideas of Ta$lor are said to be infeasible in "ractice *or
eg "lanning cannot full$ be se"arated from doing because these are t8o
sides of the same %ob and are not different %obs Similarl$ functional
foremanshi" is li)el$ to create "roblems because it violates the "rinci"le of
unit$ of command
v E:4$oit!tion of $!.o(% :.n the name of increasing efficienc$ 8or)ers 8ere
forced to s"eed u" affecting their "h$sical and mental health S"ecialization
and standardization ma)e the %ob dull and monotonous
Q.n final anal$sis2 Ta$lor made a lasting contribution to ma)ing %obs and their
management more efficient and "roductive Scientific management 8as develo"ed
b$ engineers and scientists and their concern for efficienc$ led to better methods
and tools Man$ contributions of Ta$lor have stood the test of time -ccording the
#eter Druc)er Scientific management is one of the great liberating and "ioneering
insights 7ithout it a real stud$ of human beings at 8or) 8ould be im"ossible
Ta$lor laid the foundations of management as science
Diffe%en,e .et9een T!3$o%2& &,ientifi, #!n!"e#ent !n+ F!3o$2& 4%in,i4$e&:
Sr
no
'asis of
difference
Ta$lorAs scientific
management
*a$olAs "rinci"le
1 'eginning Ta$lor begins from lo8er
8or)er and moved u"8ard
*a$ol begin from to"
management and moved
do8n8ard
6 ,evel of
management
Ta$lor gave im"ortance to the
o"erating level
*a$ol gave im"ortance to
the to" level
? *ocus .ts focus is increasing
"roductivit$ b$ 8a$ of 8or)s
.ts focus is to im"rove over
all administration b$
sim"lification2 time and
motion stud$ etc
ado"ting certain "rinci"les
I Results .ts results are based on
scientific observation
.ts results are based on
"ersonal e@"eriences
J Rigidit$ Ta$lorAs "rinci"les are
com"arativel$ rigid
*a$olAs "rinci"les are
com"arativel$ fle@ible
K #ur"ose
&contribution(
To increase the "roductivit$
of 8or)ers b$ eliminating the
8astes
To develo" general theor$
of administration
Geo%"e E$ton M!3o G>DDF - >E1EH
6!9t)%one E:4e%i#ent&
1 I$$(#in!tion E:4e%i#ent& & illumination affected #roductivit$(
6 Re$!3 !&&e#.$3 Te&t %oo# E:4e%i#ent& & 7or)ing conditions and
#roductivit$(2 "iece 8or)2 rest "auses2 shorter 8or)ing hours2
? M!&& inte%'ie9in" P%o"%!##e & Direct 0uestions(2 Grievances2 dee"
rooted disturbance2 satifactor$ level
O(t,o#e&
7or)ers 8or)ing in a grou" develo" bond of relationshi"s
'ehavior at 8or)"lace de"ends on their mental state2 emotions and
"re%udices
Emotional factors "la$ an im"ortant role in determining
4uman and liberal attitude of su"ervisor hel"s in im"roving
"erformance
Managerial s)ills and technical s)ills are not necessar$ to be a
successful leader
6ENRY LAURENCE GANTT G>DB> >E>EH
Contribution 8as famous2 Gantt chart2 used for scheduling and control
of 8or)
Tas) and 'onus "lan & Minimum 8ages is guaranteed to all 8or)ers
irres"ective of out"ut2 E@tra 8ages are "aid for e@tra 8or)(
FRANK BUNKER GILBRET6 G>DBD - >E?1H
Motion stud$2 time stud$
*atigue Stud$
7or) Sim"lification ? "ositional "romotion "lan & "resent "osition2
the "osition to be held before "romotion to his "resent "osition and the
ne@t higher "osition(
F(n,tion& of #!n!"e#ent:
P$!nnin":
.t is a "rocess of thin)ing before doing .t involves determinations of goals
and the activities re/uired to be "erformed to achieve the goals It ,on&i&t&:
7hat is to be doneB
&i( 4o8 it is to be doneB
&ii( 7here it is to be doneB
&iii( 7hen it is to be doneB
&iv( '$ 8hom it is to be doneB
So "lanning is a "rocess of shorting out the "ath for attaining the determined
ob%ective of the business Over all "lanning is deciding that in "resent2 8hat is to do
in future
?/ O%"!ni*in":
Organizing refers to the 8a$ in 8hich 8or) of a grou" of "eo"le is arranged
and distributed among the grou" members to achieve the ob%ectives of an
organization -s a function of management organizing refers to the fo$$o9in":
&a( 'ringing together human and non-human resources that
is the 8or) to be done and its distribution in human resources
&b( To define and establish authorit$ res"onsibilit$
relationshi" for the achievement of goals
&c( Determination of ob%ectives
&d( Division of activities into %obs
&e( *itting individuals into %obs2 and
&f( Develo"ing relationshi"s
.n conclusion 8e can sa$ that organizing refers to distribution of 8or) to the
su"eriors and sub-ordinates and fi@ing there authorities and res"onsibilities
@/ St!ffin":
Staffing is the "rocess of determining the man"o8er re/uirement that could meet
the com"an$As ob%ectives Staffing is a managerial function of attracting2
ac/uiring2 develo"ing and maintaining the human resources re/uired to achieve
the organisation ob%ective efficientl$
Staffing also involves u"grading of /ualit$+s)ills of the staff to get higher
"erformance from then #ersonnel de"artment of an organisation loo)s after the
function of staffing Staffing usuall$ includes the follo8ing activitiesC
&i( 4uman resource "lanning
&ii( -nnouncing vacant "ositions2 that is recruitment
&iii( Receiving a""lications
&iv( -dministering test
&v( .ntervie8ing
&vi( Medical test
&vii( *inal selection and a""ointment letter
&viii( Orientation and "lacement
1/ Di%e,tin" o% Le!+in":
Directing as a function of management is concerned 8ith instructing2 guiding
and ins"iring "eo"le in the organisation to contribute to the best of their ca"abilities
for the achievement of organizational ob%ectives -s a conclusion directing includes
the fo$$o9in":
&a( Co##(ni,!tion: it is the "rocess of "assing information
and understanding from one "erson to another This "rocess is
necessar$ for ma)ing the subordinates understand 8hat the
management e@"ects of them - manager has al8a$s to tell the
subordinates 8hat to do2 ho8 to do it and 8hen to do it 4e has to
create an understanding in their minds in regard to these matters
&b( Le!+e%&)i4: a good manager must also be an effective
leader ,eadershi" is concerned 8ith influencing the behavior of
follo8ers .n order to get the coo"eration of em"lo$ees2 the manager
must have leadershi" s)ills The st$le of leadershi" 8ill var$ from
situation to situation
&c( Moti'!tion: effective motivation is necessar$ for getting
voluntar$ coo"eration of the subordinates Different t$"es of re8ards
motivate different "eo"le Ever$ manager should stud$ the behaviour
of individuals 8or)ing under him to "rovide him or her "ro"er
inducements To some financial incentives are im"ortant2 8hile others
are motivated b$ non-"ecuniar$ incentives li)e %ob securit$2 %ob
enlargement2 freedom to do 8or) and recognition
&d( .ssuing orders and instruction b$ the su"erior
&e( ,eading the subordinates to influence their activities
to8ards achievement of goals
&f( To ensure that the subordinates are 8or)ing as "er "lans
and "olicies
A/ Cont%o$$in":
Controlling is a "rocess of verif$ing 8hether actual "erformance is in
accordance to the "lanned "erformance and to ta)e corrective action 8herever
re/uired
.t involves com"arison of actual "erformance 8ith the "lanned "erformance as to
/ualit$2 /uantit$2 time ta)en etc and than anal$se the deviations and to ta)e
corrective measures to correct the deviations .t involves the follo8ing &te4&:
1 Establishment of standards
6 Measurement of actual "erformance
? Com"arison of actual "erformance 8ith the "laned
"erformance
I *ind out deviations
J Ta)ing corrective action
MANAGERIAL ET6ICS:
The term FethicsA refers to value-oriented decisions and behaviour The 8ord
ethics comes from the Gree) root2 ethros2 meaning character2 giving beliefs2
standards2 or deals that "ervade a grou"2 a communit$2 a "eo"le-------- Toda$ ethics
is the stud$ of moral behaviourRthe stud$ of ho8 the standards of moral conduct
among the individuals are established and e@"ressed behaviourall$ Terms such as
business ethics2 cor"orate ethics2 medical ethics2 or legal ethics are used to indicate
the "articular area of a""lication 'ut to have meaning2 the ethics involved in each
area must still refer to the value-oriented decisions and behaviour of individuals
Ethics refer to a set of moral "rinci"les2 8hich should "a$ a ver$ significant role in
guiding the conduct of managers and em"lo$ees in the o"eration of an$ enter"rise
Ethics is concerned 8ith 8hat is right and 8hat is 8rong is human behaviour .t is
normative and "rescri"tive2 not neutral .t addresses the /uestion of 8hat ought to
be Ethics refer both to the bod$ of moral "rinci"les governing a "articular societ$
or grou" and to the "ersonal normal "rece"ts of an individual
Some "eo"le subscribe to a utilitarian reference in determining 8hat is 8rong
and 8hat is right The$ hold that a "ro"osed course of action should be %udged from
the stand"oint of greatest good for the greatest number of "eo"le *rom this "oint of
vie82 there are fe8 absolute standards and each issue must be %udged b$ stud$ing its
im"act u"on all affected "arties
APPROAC6ES TO MANAGEMENT
Modern management has develo"ed through several stages or a""roaches
These a""roaches to the stud$ of management ma$ be classified as underC
1 Classical -""roach
6 'ehavioral -""roach
? Management Science -""roach
I S$stem -""roach
J Contingenc$ -""roach
T)e C$!&&i,!$ A44%o!,)
The classical or em"irical a""roach is based on the follo8ing tenetsC
1 Management is a "rocess consisting of interrelated functions "erformed to
achieve the desired goals
6 *rom the e@"erience of managers in different organizations2 "rinci"les or
guidelines can be derived
? These "rinci"les are basic truths2 8hich can be a""lied2 in different
organizations to im"rove managerial efficienc$
I Managers can be develo"ed through formal education and training
J #eo"le are motivated mainl$ b$ incentives and "enalties Therefore
managerAs use and control economic re8ards
K Theoretical research into management hel"s to develo" a bod$ of )no8ledge2
8hich is necessar$ to im"rove the art of management
The classical a""roach offers a convenient frame8or) for the education
and training of future managers .T vie8s management as distinct disci"line based
on certain "rinci"les -nother merit of this a""roach is that it focuses attentions on
8hat managers actuall$ do2 ie2 functions of management .t highlights the
universal nature of management .t "rovides a foundation for further research in
management
The classical a""roach2 ho8ever2 suffers from several limitations *irst2 it
is a mechanical a""roach2 8hich undermines the role of human factor in
management The focus is on technical and economic as"ects2 at the cost of socio-
"s$chological issues in management Secondl$2 the validit$ and universalit$ of
management "rinci"les is doubtful due to environmental changed Thirdl$2 there is a
danger in rel$ing too much on "ast e@"erience2 as t8o managerial situations are
never identical
There are three main braches of classical theor$ &a( scientific
management2 &b( -dministrative theor$2 and &c( bureaucrac$
*7 Ta$lor2 4enri *a$ol2 Ma@ 7eber2 ,*Gr8ic)2 <DMoone$
-CReile$ and several other "ioneers made significant contributions to8ards the
develo"ment of the classical a""roach
Be)!'io%!$ S,ien,e& A44%o!,)
The 4a8thorne E@"eriments conducted b$ Elton Ma$o and his team laid the
foundations of behavioral sciences a""roach Several "ioneers such as
-4Moslo82Douglas McGreger2 *rederic) 4erzberg2 and Rensis ,i)ert e@"ended
the findings of 4a8thorne E@"eriments and launched the 4uman Relation
Movement ,ater on =eith Davis2 Chester 'ernard2 =urt ,evin and others
develo"ed the fields of Grou" D$namics and organization 'ehaviors 'ehavioral
sciences a""roach involves the a""lication of )no8ledge dra8n from behavioral
sciences &"s$cholog$2 sociolog$2 anthro"olog$2 etc( to managerial "roblems The
main "ro"ositions of this a""roach areC
1 - business organization is not merel$ a techno-economic s$stem .t is much
more a social s$stem of inter"ersonal and intergrou"s relations
6 The attitudes and "erformance of an em"lo$ee are dominated b$ the social
grou" to 8hich he belongs Members of and organization behave not as
individuals but as members of some grou"
? Social and "s$chological incentives e@ercise a greater influence on em"lo$ee
motivation than 8or)ing a conditions and economic re8ards
I Management must understand and develo" harmonious inter"ersonal
relations among his subordinates There should be harmon$ bet8een human
needs and organizational goals
J Em"lo$ees are ca"able of self-direction and control Therefore2 "artici"ative
leadershi" is more "roductive than tas) centered leadershi"
K Management re/uires social s)ills to ma)e em"lo$ees feel a "art of the
organization
Criticism
i 4uman relations movement see)s to mani"ulate and e@"loit the emotions of
em"lo$ees for the benefit of the organization b$ "roviding a false sense of
ha""iness or satisfaction
ii .t ignores the 8ider environmental issues inside and outside an organization
Social environment ma$ fail to motivate em"lo$ees if the$ find their find
their %obs highl$ structured and monotonous
iii 4uman relations movement is based on the assum"tion- that ha""$ 8or)er
are more "roductive 8or)ers There is in fact no direct correlation bet8een
%ob satisfaction and "roductivit$
iv The movement undermines the role of economic re8ards Des"ite cordial
inter"ersonal relations2 em"lo$ee motivation ma$ be lo8 if the$ feel
under"aid
-ccording to Duc)er2E The theor$ of human relations freed management
from the domination of viciousl$ 8rong ides2 but it didH not succeed in
substituting ne8 conce"ts2 human relations "ut all the stress on inter"ersonal
relations and the informal grou" .ts starting "oint 8as in individual "s$cholog$
rather than in the anal$sis of 8or)er and 8or) and 8or) -s a result there 8as a
tendenc$ for human relation to degenerate into mere slogans 8hich become and
alibi for having no management "olic$ in res"ect to the human organizationN
'ehavioral a""roach is much disci"linar$ .t has made significant
contributions to our understanding of "eo"le at 8or) and grou"s in organizations .t
recognizes and organization as a social organism sub%ect to the attitudes2 culture of
"eo"le Motivation2 leadershi"2 8or) designs2 grou" d$namics and "artici"ation are
the main conce"ts of behavioral sciences a""roach
'ehavioral a""roach has contributed ne8 ideas for more effective
management .t is2 ho8ever2 not free from limitations *irst2 it lac)s the "recision of
classical theor$ because a human behavior is un"redictable Secondl$2 its
conclusions lac) scientific validit$ and suffer from a clinical bias .ts findings are
tentative Thirdl$2 management is much 8ider than organizational behavior
*ourthl$2 its a""lication in "ractice is ver$ difficult because it re/uires fundamental
changes in the thin)ing and attitudes the 8orld outside it has been overloo)ed in the
neo-classical theor$
M!n!"e#ent S,ien,e o% M!t)e#!ti,!$ A44%o!,)
The management science a""roach 8as evolved after the Second 7orld
7ar .t involves the a""lication of so"histicated /uantitative+mathematical
techni/ues for solving managerial "roblems Several mathematicians2 engineers and
economists li)e 4erbert -Simon2 >on !e8man2 RMC$ert2 <ames March2
7CChurchman2 Russel -c)off made significant contributions to this a""roach
This a""roach is )no8n b$ several names2 eg decision theor$ a""roach2
mathematical a""roach2 /uantitative a""roach2 o"erations research a""roach2 etc
The management science a""roach differs from the classical and behavioral
a""roaches in several 8a$s .ts distinguishing features are given belo8C
&1( Rational decision-making. -n organization is considered a decision-ma)ing
unit and the main %ob of a manager is to ma)e decisions and solve "roblems
The /ualit$ of managerial decisions determines organizational efficienc$
Therefore2 a management decision determines organizational efficienc$
Therefore2 management information s$stem and other techni/ues should be
used for ma)ing rational decisions
&6( Mathematical models. - model is sim"lified re"resentation of real life
situation .t utilizes mathematical s$mbols and relationshi"s .t reduces a
managerial decision to a mathematical form so that decision-ma)ing "rocess
can be simulated and evaluated before the actual decision is made Different
variables are /uantified and e@"ressed as and e/uation 7ith the hel" of a
mathematical model2 a manager can test different values f each variable until
and acce"table solution is found .t avoids the time and cost constraints Hof
trial and error 'ut great care is re/uired to ensure that all material
relationshi"2 constraints and variables are incor"orated in the model
&?( Computer applications. The use of com"uters has been the driving force n
the develo"ment of the management science a""roach The com"uter can
handle in minutes e@tremel$ com"le@ "roblems 8ith an immense volume of
data and also calculate numerous variations in the solution
&I( Evaluation criteria. -s the main focus of the management science a""roach
is on scientific decision-ma)ing2 models are evaluated for effectiveness
against the set criteria2 li)e cost reduction2 return on investment2 schedules
and deadlines2 etc2
The management science a""roach has made a significant im"act on the
"ractice of management The methods and techni/ues develo"ed under it are being
increasingl$ used for managerial decision-ma)ing This a""roach has contributed a
lot in develo"ing orderl$ thin)ing in management leading to more e@actness The
management science a""roach has given effective tools to solve "roblems of
"lanning and control 4o8ever it has made little contribution in the areas of
organizing staffing2 motivation and leader shi" .t overstresses decisional roles of
manager at the cost of inter"ersonal and informational roles Moreover2
mathematical models and techni/ues are man$ times far from the realities of the
management situations The a""roach covers onl$ a "art of the mangerAs %ob2 as it
cannot effectivel$ deal 8ith inter"ersonal and grou" relationshi"s Decision-ma)ing
is onl$ a "art of management
T)e S3&te#& A44%o!,)
The s$stems a""roach to management 8as develo"ed during the late
1LJ9s Man$ "ioneers such as E, Trist2 -=Rice2 *E=ast2 <ERosenz8eig2
R-<ohnson2 R,=ahn2 Daniel =atz2 and =enneth 'oulding have mode significant
contributions to this a""roach The fundamental features of the s$stems a""roach
are as follo8s
&1( -n organization is a s$stem consisting of ma$ interrelate and interde"endent
"arts or sub-s$stems These elements are arranged These elements are
arranged orderl$ according to some scheme such that the 8hole is more than
the sum of the "arts This is calledA s$nerg$A
&6( -s a s$stem an organization dra8s in"uts &energ$2 information2 materials2
etc( from its environment .t transforms these in"uts and returns the out"ut
into the environment in the form of su"er s$stem &Environment(
&?( Ever$ s$stem is "art of su"er s$stem &environment(
&I( Organization is an o"en s$stem and it interacts 8ith its environment .t is also
a d$namic s$stem as the e/uilibrium in it is al8a$s changing -n
organization o"erates in a d$namic environment2 8hich cannot be "redicted
8ith certaint$ Therefore2 it is "robabilistic
&J( Management is e@"ected to regulate and ad%ust the s$stem to secure better
"erformance Management involves ta)ing into account man$ variables
7hich are interrelated and interde"endent This multivariate as"ect of
management suggests that there is no sim"le cause and effect relationshi"
&K( Management is multidisci"linar$ as is a dra8 and integrates )no8ledge from
various disci"lines
S$stems are of t8o t$"esC closed s$stem and o"en s$stem - closed
s$stem has no interaction 8ith the outside 8orld 8hile and o"en s$stem continuall$
interacts 8ith its environment -ll living s$stem is o"en s$stem Organizations are
o"en s$stems 'ecause the$ consist of "eo"le

E!>.RO!ME!T
.!#GTS TR-!S*ORM-T.O! OGT#GTS
Mone$
Man"o8er Goods ; services
Machiner$ Em"lo$ment
Material Ta@es
Method Others

S$stems a""roach is an im"rovement over classical and neoclassical theories
as it is closer to realit$ The traditional theorists vie8ed organization as a closed
s$stem 8hile modern theorists treat it as o"en s$stem The s$stem a""roach
*EED'-C=
highlights the multidimensional and multidisci"linar$ nature of management .t
ta)es much 8ider and overall "ers"ective of organizational functioning .t "rovides
a better conce"tual frame8or) for anal$zing and understanding organizations and
their management .t stresses that managers should avoid anal$zing "roblems in
isolation and should ado"t and integrated a""roach S$stems a""roach suggests that
the internal functioning of an organization must be consistent 8ith the needs of its
members and the demands of the changing environment S$stems a""roach focuses
on d$namic interde"endenc$ bet8een s"ecialized functions Thus2 conce"t of
8holism constitutes the core of s$stems theor$ .t is conductive to a better
understanding of the com"licated interloc)ing net8or) of institutions that constitute
the business s$stem
S$stems a""roach2 ho8ever2 ho8ever2 suffers from some dra8bac)s *irst2
s$stems conce"ts are said to be abstract and vague Secondl$2 too man$ sub-s$stems
and interde"endence among them ma)e the tas) of manager ver$ difficult .t
becomes com"licated and it is not clear 8hat to do to effect the desired change in
the s$stem
Contin"en,3 A44%o!,)
The contingenc$ a""roach to management to management emerge from
the real life e@"erience of managers 8ho found that no single a""roach 8or)ed
consistentl$ in ever$ situation The basic idea of this a""roach is that no
management techni/ue or theor$ is a""ro"riate in all situations .n other 8ord2
managerial "ractices and st$les 8ill differ according to the "articular circumstances
of the situation &contingenc$( <ohn 7ood8ard2 #R,a8rence2 <7,orsch2
T'urns2 GMStal)er2 Charles #erro82 <DThom"son -nd 4enr$ Mintzberg have
made significant contributions to the contingenc$ a""roach
The main determinants of a contingenc$ are related to the e@ternal and
internal environments of an organization E@ternal environment com"rises
economic2 social technological and "olitical factors influencing the organization
.nternal environment or state of the organization refers to various constraints and
resources that are available These include
&1( Technological constraints. !ature and t$"e of the "rocess used to "roduce
goods and services
&6( Task constraints !ature of tas)s "erformed b$ individual 8or)ers
&?( People constraints. T$"es of individuals em"lo$ed and their levels of
com"etences
The main features of the contingenc$H a""roach are as follo8sC
Management is entirel$ situational There is no one best 8a$ of managing an
organization 7hat managers do de"ends u"on the circumstances of the
"articular situation *or e@am"le2 "eo"le-oriented st$le ma$ succeed in given
situation but tas)-orientation ma$ be more effective in another situation
!o organizational design can be suitable for all situations The suitable
design should be determined )ee"ingH in vie8 the size2 technolog$2 "eo"le
and environment of the enter"rise
-n organization interacts 8ith its environment and must2 therefore2 ada"t
itself to environmental changes
Management st$le and "roactive should match the re/uirements of the
situation
Success in management de"ends u"on the abilit$ to co"e 8ith environmental
demands There2 managers should shar"en their diagnostic s)ills to antici"ate
and com"rehend and com"rehend the environmental changes
The contingenc$ a""roach ma$ be vie8ed as Fif thenA a""roach to
management .n fig ?6 horizontal a@is re"resentsA ifA environmental variable 8hileA
thenA&management "ractices( are sho8n on vertical a@is Effective management
re/uires a "ro"er match bet8een the t8o t$"es of variables
Management variables T4E!
.*
Environment variables
The contingenc$ a""roach is an e@tended and im"roved version of the
s$stem a""roach This theor$ em"hasizes that the best 8a$ to lead2 "lan2 organize
and conduct managerial activities varies 8ith situation There are no universal
"rinci"les to be a""lied in all situations Managers must anal$ze different situations
and use the best a""roach2 8hich is most suitable in that "articular situation
T)e #!in !+'!nt!"e of this theor$ is that it com"els us to be a8are of
com"le@it$ in ever$ situation and forces us to ta)e an active and d$namic role in
determining 8hat best 8ould 8or) in each case
Contingenc$ theor$ is "ractical and realistic and offers and e@"lanation
of the realities of managerAs %ob .t /uestions the universal validit$ of management
"rinci"les and "ractices .t avoids value %udgments and e@horts managers to be
innovative and creative The contingenc$ a""roach advocates com"arative anal$sis
of organizations to bring about a fit bet8een management s$stem and environment
Contingenc$ theor$ has2 ho8ever2 been criticied on several ground *irst2 it lac)s a
sound theoretical base Secondl$2 Fit all de"ends u"on the situationA confuses
management - manager has to thin) through all "ossible alternatives as he has no
cutH of dried "rinci"les to act u"on .n order to o"erationall$ the contingenc$
theor$2 management ma$ ado"t the follo8ing "rocessC&a( -nal$ze and understand
the "articular situation2 &b( e@amine the validit$ of alternative a""roaches to the
situation at hand2 &c( ma)e the right choice b$ matching the a""roach 8ith the
situation2 and &d( im"lement the choice and revie8 "rogram
ORGANIZATIONAL ENVIRONMENT AND UNDERSTANDING ORGANIZATIONAL CULTURE
This lecture discusses the com"onents and com"le@ities of an organizationAs culture
and the e@ternal+internal environment and ho8 these ma$ constrain managers Managers are
also res"onsible for im"roving sta)eholder involvement in decisions ma)ing and actions
ta)ing Managers must be a8are that organizational culture and organizational environments
8ill influence both the 8a$ an organization is managed as 8ell as its effectiveness 4o8 can
an understanding of organizational culture and the e@ternal environment hel" the managerB ,et
us learn
T6E ENVIRONMENT:
The im"act of the e@ternal environment on a managerAs actions and behaviors cannot be
overem"hasized There are forces in the environment that "la$ a ma%or role in sha"ing
managersA endeavors
The en'i%on#ent is defined as outside institutions and forces outside the organization that
"otentiall$ affect an organizationAs "erformance
Types of Environment:
>( E@ternal Environment
6( .nternal Environment
E:te%n!$ En'i%on#ent
MMajor forces outside the organization with potential to influence significantly a
product or services likely success is called its external environment.2
T34e& of e:te%n!$ en'i%on#ent&:
The insights derived from s$stems theor$ have hel"ed to highlight the im"ortance of a
managed interaction bet8een an organization and its e@ternal environment T8o ma%or divisions
have been made in the e@ternal environmentC
1( The Mega Environment
6( The Tas) Environment
T)e Me"! En 'i%on # ent:
The #e"!en'i%on#ent7 or general environment as it is sometimes called2 is that
segment of the e:te%n!$ en'i%on#ent that reflects the broad conditions and
trends in the societies 8ithin 8hich an organization o"erates
M!<o% E$e#ent& of t)e Me"! En'i%on#ent
1 The te,)no$o"i,!$ e$e#ent of the mega-environment reflects the
current state of )no8ledge regarding the "roduction of
"roducts and services
a Technolog$ is a "articular state of )no8ledge .t is not
DthingsE - com"uter2 for instance2 is an artifact or an e@am"le
of technolog$ and is not technolog$ itself
b Research indicates that technolog$ tends to evolve through
"eriods of .ncremental change "unctuated b$ technological
brea)throughs that either enhance or destro$ the com"etence of
firms in an industr$
c !umerous "ublications &such as 'usiness 7ee)2 *orbes2
etc( and on-line services &such as ,EO.S+!EO.S( "rovide
information regarding technological and other environmental
elements
6 The e,ono#i, e$e#ent of the mega-environment
encom"asses the s$stems of "roducing2 distributing2 and
consuming 8ealth
a .n a ,!4it!$i&t e,ono#37 economic activit$ is governed
b$ mar)et forces and the means of "roduction are
"ri v a t el$ o8 n ed b$ individuals2 either directl$ or
through cor"orations
b .n a &o,i!$i&t e,ono#37 the means of "roduction are
o8n ed b $ t he sta te
and economic activit$ is coordinated b$ state "lan
c .n "ractice2 countries tend to have h$brid
economies2 incor"orating elements of ca"italism and
socialism
d Organizations are influenced in an$ given economic
s$stem b$ a variet$ of economic conditions over 8hich
the$ have little control2 such as inflation
and interest rates
? The le"!$4o$iti,!$ e$e#ent of the mega-environment
includes the legal and governmental s$stems 8ithin 8hich an
organization must function
a Organizations must o"erate 8ithin the general legal
frame8or) of the countries in 8hich the$ do business
b Organizations are sub%ect to an increase in la8suits filed
b$ customers or em"lo$ees
c The "olitical issues 8hich affect organizations
include those 8hich influence the e@tent of
government regulation
d
I The &o,io,($t(%!$ e$e#ent of the mega-environment
includes the attitudes2 values2 norms2 beliefs2 behaviors2 and
associated demogra"hic trends that are characteristic of a
given geogra"hic area
a The sociocultural element is of "articular im"ortance
to multinational cor"orations
b Sociocultural trends can result in im"ortant shifts in
demand for "roducts
J The inte%n!tion!$ e$e#ent of the mega-environment includes
the develo"ments in countries outside an organizationAs home
countr$ that have the "otential im"act to the organization
.nternational factors far be$ond the direct influence of a
"articular organization can have "rofound effects on its
abilit$ to o"erate successfull$
a *luctuations of the dollar against foreign currencies
influence the abilit$ of an organization to com"ete in
international mar)ets
b *ree-trade agreement2 such as the !-*T-2 G-TT
can affect an organization either "ositivel$ or
negativel$
T)e T!&8 En'i%on#ent
The t!&8 en'i%on#ent is that segment of the e@ternal environment made u" of
s"ecif i c outsi d e ele m ents &usuall$ organizations( 8ith 8hich an organization
interfaces in the course of conducting its business The tas) environment de"ends
on the "roducts and services the organization offers and the locations 8here it
conducts business The organization ma$ be more successful in affecting its tas)
environment than it is its mega-environment
E$e#ent& of t)e T!&8 En'i%on#ent:
1 -n organizationAs ,(&to#e%& !n+ ,$ient& are those individuals
and organizations
that "urchase its "roducts and+or services .t is becoming
increasingl$ im"ortant to sta$ in touch 8ith customersA needs
6 -n organizationAs ,o#4etito%& are other organizations that
either offers of have a high "otential of offering rival "roducts
or services
a Organization needs to )ee" abreast of 8ho their
com"etitors are and 8hat the$ are doing
b 7a$s to trac) 8hat com"etitors are doing include
obtaining information from commercial data bases2 s"ecialt$ trade
"ublications2 ne8s cli""ings from local ne8s"a"er2 hel"-8anted ads2
"ublished mar)et research re"orts2 business re"orts2 trade sho8s2 "ublic
filings2 advertisements2 and "ersonal contacts
? -n organizationAs &(44$ie%& are those individual organizations that su""l$
the resources &such as ra8 materials2 "roducts2 or services( the organization
needs to conduct its o"erations
I -n organizationAs $!.o% &(44$3 consists of those individuals 8ho are
"otentiall$ em"lo$able b$ the organization
a Organization ma$ have to shift their location if labor
su""lies dr$ u" in some areas and increase in others
J >arious "o'e%n#ent !"en,ie& "rovide services and monitor com"liance 8ith
la8s and regulations at local &eg2 consumer affairs(2 state or regional &eg2
health de"artment(2 and national &eg2 C'R( levels
O%"!ni*!tion2& Re$!tion&)i4& 9it) St!8e)o$+e%&:
1 Sta)eholders are an$ constituencies in the organizationAs e@ternal
environment that are affected b$2 or have a vested interest in2 the
organizationAs decisions and actions
6 Sta)eholder relationshi" management is im"ortant for t8o reasonsC
a .t can lead to im"roved "redictabilit$ of environmental changes2 more
successful innovation2
greater degrees of trust2 and greater organizational fle@ibilit$ to
reduce the im"act of change
b .t is the DrightE thing to do2 because organizations are de"endent on
e@ternal sta)eholders as sources of in"uts and outlets for out"uts and
should be considered 8hen ma)ing and im"lementing decisions
? Sta)eholder relationshi"s are managed using four ste"sC
a .dentif$ e@ternal sta)eholders
b Determine the s"ecific interests of each
sta)eholder grou" c Decide ho8 critical these
interests are to the organization
d Determine 8hat s"ecific a""roach managers should use to manage each
relationshi"
T6E ORGANIZATION2S CULTURE:
<ust as individuals have a "ersonalit$2 so2 too2 do organizations 7e
refer to an organizationAs "ersonalit$ as its culture
O%"!ni*!tion!$ ,($t(%e is a s$stem of shared meaning and beliefs 8ithin an
organization that determines2 in large degree2 ho8 em"lo$ees act This
definition im"lies several things
1 Culture is a "erce"tion that e@ists in the organization2 not in the individual
6 Organizational culture is a descri"tive term .t describes rather than
evaluates
? Seven dimensions of an organizationAs culture have been "ro"osedC
a .nnovation and ris) ta)ing &the degree to 8hich em"lo$ees are
encouraged to be innovative and
ta)e ris)s(
b -ttention to detail &the degree to 8hich em"lo$ees are e@"ected to e@hibit
"recision2 anal$sis2 and attention to detail(
c Outcome orientation &the degree to 8hich managers focus on results or
outcomes rather than on
the techni/ues and "rocesses used to achieve those outcomes(
d #eo"le orientation &the degree to 8hich management decisions ta)e into
consideration the effect on "eo"le 8ithin the organization(
e Team orientation &the degree to 8hich 8or) activities are organized
around teams rather than
individuals(
f -ggressiveness &the degree to 8hich "eo"le are aggressive and
com"etitive rather than eas$going and coo"erative(
g Stabilit$ &the degree to 8hich organizational activities em"hasize
maintaining the status /uo in
contrast to gro8th(
Em"lo$ees DlearnE an organizationAs culture in different 8a$s
1 Organizational stories are one 8a$ that em"lo$ees learn the culture These
stories t$"icall$ involve a narrative of significant events or "eo"le
6 Rituals are re"etitive se/uences of activities that e@"ress and reinforce
the )e$ values of the organization2 8hat goals are most im"ortant2 8hich
"eo"le are im"ortant
MANAGEMENT TRENDS
7here are 8e toda$B 7hat current management conce"ts and "ractices are
sha"ing Dtomorro8As histor$EB This session establishes first a frame8or) for
understanding social res"onsibilit$ and managerial ethics Then2 in this session2
8eAll attem"t to ans8er those above stated /uestions b$ introducing several
trends and issues that 8e believe are changing the 8a$ managers do their
%obsC globalization2 entre"reneurshi"2 managing in an e-business 8orld
SOCIAL RESPONSIBILITY AND ECONOMIC PERFORMANCE/
SOCIAL RESPONSIVENESS The abilit$ of a cor"oration to elate its
o"erations and "olicies to the social environment in 8a$s that are mutuall$
beneficial to the com"an$ and to societ$
- Reaction or "roaction
- The role of government
- The influence of values and "erformance
- Criteria on behaviour
Def #eter Druc)er D Social Res"onsibilit$ re/uires managers to consider 8hether
their action is li)el$ to "romote the "ublic good2 to advance the basic beliefs of our
societ$2 to contribute to its stabilit$2 strength and harmon$E
T)e So,i!$ A(+it
The Social audit has been defined as D a commitment to s$stematic assessment of
and re"orting on some meaningfulH2 definable domain of com"an$As activities that
have social im"actE
Societ$ has become increasingl$ a8are of the interde"endence bet8een the
business and its environment -s business gro8 in size and "o8er2 societ$ e@"ects
more from them several forces have led to the develo"ment of the conce"t of social
Res"onsibilit$ Some of the forces are -
Consumerism
Trade Gnion
#ublic O"inion
Enlightened Self .nterest
#rofessionalisation
Trusteeshi"
Res"onsibilit$ of business to "erform its basic economic function of
"roducing and su""l$ing "roducts and services in the most efficient manner
so as to ma@imize "rofits
So,i!$ Re&4on&i.i$it3 of B(&ine&&
Et)i,& in M!n!"in"
- Ethics is defined as the disci"line dealing 8ith 8hat is good and bad2 8ith moral
dut$ and obligation
- #ersonal Ethics has been referred to as D the rules b$ 8hich an individual lives his
or her "ersonal life
- -ccounting ethics "ertains to the code that guides the #rofessional conduct of
accountants
B(&ine&& Et)i,& is concerned 8ith truth and %ustice and has a variet$ of as"ects
such as e@"ectations of societ$2 fair com"etition2 advertising2 "ublic relations2
Social res"onsibilities2 Consumer autonom$ and Cor"orate behaviour in the home
countr$ as 8ell as abroad
Et)i,!$ T)eo%ie&
OT4ERS
COMMG!.T
M
GO>ER!M
E!T
CGSTOMER
S
EM#,OMEE
S
S4-RE
4O,DERS
'GS.!ESS
- Gtilitarian Theor$ suggests that "lans and actions should be evaluated b$ their
conse/uences
- Theor$ based on rights holds that all "eo"le have basic rights
- Theor$ of %ustice demands that decision ma)ers be guided b$ fairness and e/uit$2
as 8ell as im"artialit$
In&tit(tion!$i*in" Et)i,&
This means a""l$ing and integrating ethical conce"ts into dail$ action This can be
accom"lished in ? 8a$s-
1 '$ establishing a""ro"riate com"an$ "olic$ or a code of Ethics
6 '$ using a formall$ a""ointed ethics committee
? '$ teaching ethics in Management develo"ment "rograms
A ,o+e i& ! &t!te#ent of Po$i,ie&7 4%in,i4$e&7 o% %($e& t)!t "(i+e .e)!'io(%/
T)e f(n,tion& of Et)i,& Co##ittee in,$(+e&
1 holding regular meeting to discuss ethical issues
6 dealing 8ith gra$ areas
? Communicating the code to all members of the Organization
I Chec)ing for "ossible violations of the Code
J Enforcing the Code
K Re8arding com"liance and "unishing violations
: Revie8ing and u"dating the code
5 re"orting activities of the committee to the board of directors
? F!,to%& t)!t %!i&e Et)i,!$ St!n+!%+&
> #ublic disclosure and "ublicit$
?The increased concern of a 8ell informed "ublic
To9!%+ I#4%o'in" Et)i,!$ Be)!'io%
7hat can be done to im"rove ethical behaviorB There are a number of things
organizations can do to cultivate ethical behavior among members Eight
suggestions 8ill be e@"lored
1 The selection "rocess for bringing ne8 em"lo$ees into organizations
should be vie8ed as an o""ortunit$ to learn about an individualAs
level of moral develo"ment2 "ersonal values2 ego strength2 and locus of
control
6 - ,o+e of et)i,& is a formal statement of an organizationAs "rimar$
values and the ethical rules it e@"ects em"lo$ees to follo8 -lso2 decision
rules can be develo"ed to guide managers in handling ethical dilemmas in
decision ma)ing To" managementAs leadershi" and commitment to
ethical behavior is e@tremel$ im"ortant because itAs the to" managers 8ho
set the cultural tone
I Em"lo$eesA %ob goals should be tangible and realistic2 because 8hen
goals are clear and realistic2
the$ reduce ambiguit$ and motivate rather than "unish <ob goals are
usuall$ a )e$ issue in "erformance a""raisal
J .f an organization 8ants it em"lo$ees to u"hold high ethical
standards2 it must include this dimension in its a""raisal "rocess
#erformance a""raisals should be com"rehensive and not %ust
focus on economic
outcomes
K Ethics training should be used to hel" teach ethical "roblem solving and
to "resent simulations of ethical situations that might arise .f it does
nothing else2 ethics training should increase a8areness of ethical issues
: .nde"endent social audits evaluate decisions and management
"ractices in terms of the organizationAs code of ethics and can be used
to deter unethical behavior
5 *inall$2 organizations can "rovide formal "rotective mechanisms so that
em"lo$ees 8ith ethical dilemmas can do something about them 8ithout
fear of re"risal
Ent%e4%ene(%&)i4
#racticall$ ever$8here $ou turn these da$s $ouAll read or hear about
entre"reneurs .f $ou "ic) u" a current ne8s"a"er or general ne8s magazine or
log on to one of the .nternetAs ne8s sites2 chances are $ouAll find at least one
stor$ &and "robabl$ man$ more( about an entre"reneur or an entre"reneurial
business Entre"reneurshi" is a "o"ular to"icP 'ut 8hat e@actl$ is itB
Ent%e4%ene(%&)i4 is the "rocess 8hereb$ an individual or a grou" of
individuals uses organized effort and means to "ursue o""ortunities to create
value and gro8 b$ fulfilling 8ants and needs through innovation and
uni/ueness2 no matter 8hat resources are currentl$ controlled .t involves the
discover$ of o""ortunities and the resources to e@"loit them Three im"ortant
themes stic) out in this definition of entre"reneurshi" *irst is the "ursuit of
o""ortunities Entre"reneurshi" is about "ursuing environmental trends and
changes that no one else has seen or "aid attention to *or e@am"le2 <eff 'ezos2
founder of -mazoncom2 8as a successful "rogrammer at an investment firm
on 7all Street in the mid-1LL9s 4o8ever2 statistics on the e@"losive gro8th
in the use of the .nternet and 7orld 7ide 7eb &at that time2 it 8as gro8ing
about 62?99 "ercent a month( )e"t nagging at him 4e decided to /uit his %ob and
"ursue 8hat he felt 8ere going to be enormous retailing o""ortunities on the
.nternet -nd the rest2 as the$ sa$2 is histor$ Toda$2 -mazon sells boo)s2
music2 home im"rovement "roducts2 cameras2 cars2 furniture2 %e8elr$2 and
numerous other items from its "o"ular 7eb site
The second im"ortant theme in entre"reneurshi" is innovation
Entre"reneurshi" involves changing2 revolutionizing2 transforming2 and
introducing ne8 a""roachesthat is2 ne8 "roducts or services or ne8 8a$s of
doing business
The final im"ortant theme in entre"reneurshi" is gro8th Entre"reneurs "ursue
gro8th The$ are not content to sta$ small or to sta$ the same in size
Entre"reneurs 8ant their business to gro8 and 8or) ver$ hard to "ursue gro8th
as the$ continuall$ loo) for trends and continue to innovate ne8 "roducts and
ne8 a""roaches
Entre"reneurshi" 8ill continue to be im"ortant to societies around the 8orld
*or-"rofit and even not-for- "rofit organizations 8ill need to be
entre"reneurial-that is2 "ursuing o""ortunities2 innovations2 and gro8thif
the$ 8ant to be successful 7e thin) that an understanding of entre"reneurshi"
is so im"ortant that at the end of each ma%or section in this boo)s 8eAve
included a s"ecial entre"reneurshi" module that loo)s at the to"ics "resented in
that section from the "ers"ective of entre"reneurshi"
M!n!"in" in !n EB(&ine&& Wo%$+
7hat a difference three $ears ma)esP The last time 8e revised this boo)2 the
.nternet and 7orld 7ide 7eb 8ere still a novelt$ to most managers and
organizations E-mail as a form of communication 8as gaining in "o"ularit$2 and
occasionall$ $ou sa8 7eb addresses in com"an$ advertisements Those da$s are
long2 goneP !o82 ever$8here $ou loo)2 organizations &small to large2 all t$"es2
global and domestic2 and in all industries( are becoming e-businesses Toda$As
managers must manage in an e-business 8orldP .n fact2 as a student2 $our
learning ma$ increasingl$ be ta)ing "lace in an electronic environment 7hat do
8e )no8 about this e- business 8orldB
E.(&ine&& Ge$e,t%oni, .(&ine&&H is a com"rehensive term describing the 8a$
an organization does its 8or) b$ using electronic &.nternet-based( lin)ages
8ith its )e$ constituencies &em"lo$ees2 managers2 customers2 su""liers2 and
"artners( in order to efficientl$ and effectivel$ achieve its goals .tAs more than
e- commerce2 although e-business can include e-commerce E,o##e%,e
Ge$e,t%oni, ,o##e%,eH is an$ form of business e@change or transaction in
8hich the "arties interact electronicall$
K
*irms such as Dell &com"uters(2
>arsit$ boo)s &te@tboo)s(2 and #C *lo8ers and Gifts &flo8ers and other gifts(
are engaged in e-commerce because the$ sell "roducts over the .nternet
-lthough e-commerce a""lications 8ill continue to gro8 in volume2 the$ are
onl$ one "art of an e-business
!ot ever$ organization is or needs to be a total e-business There are three
categories of e-business involvement The first t$"e is 8hat 8eAre going to call
an e-business enhanced organization2 a traditional organization that sets u" e-
business ca"abilities2 usuall$ e-commerce2 8hile maintaining its traditional
structure Man$ *ortune J99 t$"e organizations are evolving into e-business
using this a""roach The$ use the .nternet to enhance &not to re"lace( their
traditional 8a$s of doing business *or instance2 Sears2 a traditional bric)s-and-
mortar retailer 8ith thousands of "h$sical stores 8orld8ide started an .nternet
division 8hose goal is to ma)e Sears Dthe definitive online source for the homeE
-lthough Sears .nternet division2 Searscom2 re"resents a radical de"arture for an
organization founded in 155K as a catalog-sales com"an$2 itAs intended to
e@"and2 not re"lace2 the com"an$As main source of revenue
Managing in an e-8orld2 8hether as an e-business enhanced2 e-business
enabled2 or total e-business organization re/uires ne8 insights and "ers"ectives
To hel" $ou ac/uire these2 8eAve included DManaging in an E-'usiness 7orldE
bo@es in a number of cha"ters
G$o.!$i*!tio
n
Management is no longer constrained b$ national borders 'M72 a German
firm2 builds cars . South Carolina McDonaldAs2 a GS firm2 sells hamburgers in
China To$ota2 a <a"anese firm2 ma)es cars in =entuc)$ -ustraliaAs leading real
estate com"an$2 ,end ,ease Cor"oration2 built the 'lue 8ater sho""ing com"le@
in =ent2 England2 and has contracts 8ith Coca-Cola to build all the soft9drin)
ma)erAs bottling "lants in Southeast -sia S8iss com"an$ -'' ,td has
constructed "o8er generating "lants in Mala$sia2 South =orea2 China2 and
.ndonesia The 8orld has definitel$ become a global villageP
Managers in organizations of all sizes and t$"es around the 8orld are faced 8ith
the o""ortunities and challenges of o"erating in a global mar)et
B(&ine&& O%"!ni*!tion
-n Organization is a grou" of "eo"le 8or)ing together to achieve a common
goal Organization e@ists to achieve goals that individuals cannot achieve on their
o8n Organization is grou"ing of activities and "utting under different de"artments
according to their functions The Organization brings men and material resources
together for fulfilling the goals of enter"rises
T34e& of O%"!ni*!tion
1 Sole "ro"rietorshi" + .ndividual
6 #artnershi"
? <oint stoc) Com"an$ #rivate ,td Com"an$ ; #ublic ,td Com"an$
I Co o"erative Enter"rises
J #ublic Enter"rises + State o8nershi"
So$e 4%o4%ieto%&)i4 the individual entre"reneur su""lies the entire ca"ital2
em"lo$s labour and machines .ndividual uses his o8n s)ill in the management of
affairs and is solel$ res"onsible for the good or bad result of its o"eration and
8or)ing
Me%it&
1 Sim"lest form of business
6 ,east legal com"lication
? 0uic) decision
I Ma@imum #rofit
J #ersonal Care
K 0ualit$ "roduct
: Minimum 8astage
5 *le@ible business
P!%tne%&)i4 t8o or more "ersons come together and start a business 8ith their
o8n funds2 the "arties agree to share the "rofits as 8ell as bear the losses in the
agreed "ro"ortion The formation and management of "artnershi" organization is
governed b$ the .ndian #artnershi" -ct2 1L?6
Me%it&
1 4as larger financial resources
6 greater "ersonal contacts of the "artners gives more customer base and
benefits
? #ersons of different s)ills and abilities can 8or) for betterment of
Organization
I ,ess e@"enditure "er "artner is involved in forming "artnershi" Organization
J ,oss 8ill be divided among the "artners
5oint Sto,8 Co#4!n3 Ca"ital is contributed b$ a large number of "eo"le in the
form of shares of different values
P%i'!te Lt+ Co#4!n3 can be established 8ith t8o to fift$ members The
ma@imum number of membershi" is limited to J9 7hen this t$"e of Organization
e@"ands be$ond certain limit2 it can restrict its liabilit$ b$ registering the firm as a
limited com"an$ The com"an$ is registered under .ndian Com"an$ act 1LJK
P(.$i, Lt+ Co#4!n3 the minimum number of members re/uired are : and there
is no u""er limit Such com"anies offer shares to general "ublic #ublic ,td
com"anies are su"ervised and controlled b$ the Government to "rotect the interest
of Share holder "ublic The com"an$ is governed b$ an elected bod$ called board
of directors
Me%it&
1 The shareholders bears no ris) as the liabilit$ is limited
6 ,arge scale business can be underta)en
? Ta)e advantage of economies of scale in "roduction because management
can em"lo$ s"ecialized labour2 can use latest machiner$ and thus can
achieve large scale "roduction at lo8 cost
I !ot affected b$ the retirement of an$ share holder hence the e@istence of
Organization is "ermanent in nature
J 7or)s on democratic "rinci"les2 8hich results in econom$ and efficienc$
Coo4e%!ti'e Ente%4%i&e& Co-o"eration is a form of Organization 8here "ersons
irres"ective of caste2 creed and religion2 voluntaril$ associate together as human
beings .t is based on the democratic "rinci"les and functions for the 8elfare of the
"ublic at large .t "rotects the interest of consumer as 8ell as that of small
"roducers
Fe!t(%e&
1 >oluntar$ Organization
6 O"en Membershi"
? Common "ur"ose + .nterest
I Democratic Management
J !ot "rofit oriented
UNDERSTANDING GLOBAL
ENVIRONMENT WTO AND SAARC
UNDERSTANDING T6E GLOBAL ENVIRONMENT
Several significant forces are resha"ing the global environment that managers
face T8o im"ortant features of the global environment are regional trading
alliances and the 7orld Trade Organization
- Regional Trading -lliances
Regional trading alliances are resha"ing global com"etition .tAs no longer
countr$ versus countr$2
but region against region
1 The E(%o4e!n Union GEUH is a union of 1J G6J state members are
according to December2 699IH Euro"ean nations created to eliminate
national barriers to travel em"lo$ment2 investment2 and trade
a The "rimar$ motivation for the creation of the EG &in *ebruar$ 1LL6( 8as
to allo8 these nations to reassert their "osition against the industrial
strength of the Gnited States and <a"an
b The EG too) an enormous ste" to8ards full unification in 1LLL 8hen
11 of the 1J countries became "art of the EMGRthe economic and
monetar$ union2 the formal name for the s$stem
7here "artici"ating countries share the same currenc$2 the euro
c Si@ other countries &Tur)e$2 Romania2 Slova)ia2 'ulgaria2 ,atvia2
,ithuania2 and Malta( are considering starting membershi" negotiations
6 The No%t) A#e%i,!n F%ee T%!+e A"%ee#ent GNAFTAH is an agreement
among the Me@ican2
Canadian2 and GS governments in 8hich all barriers to free trade 8ill
eventuall$ be eliminated a !-*T- 8ent into effect on <anuar$ 12 1LLI
b The signing of !-*T- had both critics and cham"ions
c Eliminating the barriers to free trade &tariffs2 im"ort licensing
re/uirements2 customs user fees( has resulted in a strengthening of the economic
"o8er of all three countries
d Colombia2 Me@ico2 and >enezuela signed an economic "act eliminating
im"ort duties and tariffs in
1LLI
e -n additional ?K countries in the Caribbean region2 South -merica2 and
Central -merica are negotiating a *ree Trade -rea of the -mericas &*T--(
trade agreement
f -lso in e@istence is another free-trade bloc) )no8n as the Southern
Cone Common Mar)etR Mercosur
? The A&&o,i!tion of So(t)e!&t A&i!n N!tion& GASEANH is a trading
alliance of 19 -sian nations
a .n the future2 the -sian region "romises to be one of the fastest-
gro8ing economic regions of the 8orld
b -nother significant historical and economic event in this region 8as
the return of 4ong =ong from 'ritish rule to Chinese rule on <ul$ 12
1LL:
I The So(t) A&i!n A$$i!n,e fo% Re"ion!$ Coo4e%!tion .o+3 i/e/
SAARC
B 7orld Trade Organization &7TO( is an international bod$ of 8hich more
than 199 countries are members Several trade treaties have been agreed
and 8or)ed out so far for regulation of 8orld trade .t is a bod$ 8hich
hel"s in "romoting global2 regional and trade 8ith most favored nation
states
Te&t 3o(% !n&9e%&N
>/ 6o9 +oe& ! "$o.!$ e,ono#3 ,%e!te .ot) o44o%t(nitie& !n+ ,)!$$en"e& fo%
#!n!"e%&O
The global econom$ creates o""ortunities because2 8ith the entire 8orld
as a mar)et"lace and
national borders becoming irrelevant2 the "otential for organizations to
gro8 and e@"and increases dramaticall$ .t can create challenges in
that ne8 com"etitors can suddenl$ a""ear an$time2
an$8here2 and managers 8ho donAt res"ond /uic)l$ to changes
are li)el$ to find their organizationsA survival in doubt
?/ De&,%i.e t)e fo(% #!<o% %e"ion!$ t%!+in" !$$i!n,e& in,$(+in" 9)!t it i&7
9)3 it 9!& fo%#e+7 !n+ 9)!t ,)!$$en"e& it i& f!,in"/
The Euro"ean Gnion &EG( united 'elgium2 Denmar)2 *rance2 Greece2
.reland2 .tal$2 ,u@embourg2 the !etherlands2 #ortugal2 S"ain2 the Gnited
=ingdom2 German$2 -ustria2 *inland2 and S8eden in a single mar)et 8ith
no national barriers to travel2 em"lo$ment2 investment2 and trade The EG
8as formed to allo8 its 1J member nations to reassert their "osition
against the industrial strength of the Gnited States and <a"an .ts
ultimate goal2 to have common customs duties and unified
industrial and commercial "olicies2 as 8ell as a single currenc$ and
regional central ban)2 faces "roblems "articularl$ over the establishment
of a single currenc$
The !orth -merican *ree Trade -greement &!-*T-( united Me@ico2
Canada2 and the Gnited States in dro""ing all barriers to free trade such as
tariffs2 im"ort licensing re/uirements2 and customs user fees .t 8as
formed to "rovide such long-term benefits as %ob creation2 mar)et
develo"ment2 and an increased standard of living for all three countries
Studies have re"orted both "ositive and negative effects on em"lo$ment to
date .t faces continued o""osition from labor advocates and
environmentalists and com"etition from other regional trade alliances and
trading blocs
The -ssociation of Southeast -sian !ations &-SE-!( includes 'runei2
.ndonesia2 Mala$sia2 the #hili""ines2 Singa"ore2 Thailand2 >ietnam2 'urma2
Cambodia2 and ,aos in a trading entit$ -nother significant develo"ment in
-sia 8as the return of 4ong =ong from 'ritish Rule to Chinese rule in <ul$
1L
L:
South -sian -lliance for Regional Coo"eration &S--RC( is a bod$
com"rising of #a)istan2 .ndia2 'angladesh2 Sri ,an)a2 and !e"al .t is a
trading as 8ell as collaborative entit$ for dialogue on concerns of mutual
interest
@/ W)!t !%e t)e $e"!$4o$iti,!$ !n+ e,ono#i, f!,to%& t)!t #!n!"e%& nee+
to .e !9!%e of in
#!n!"in" "$o.!$$3O
The legal-"olitical environment consists of legal-"olitical s$stems and
legal-"olitical "rocedures
Managers must understand the legal-"olitical environment in a foreign
countr$ in order to un- derstand the constraints under 8hich the$ o"erate
and the o""ortunities that e@ist
The "rimar$ economic factors that managers must be a8are of in
global management are
fluctuating currenc$ e@change rates2 inflation rates2 and
diverse ta@ "olicies
1/ Co#4!%e !n+ ,ont%!&t n!tion!$ ,($t(%e !n+ o%"!ni*!tion!$ ,($t(%e/
,i)e organizational culture2 national culture is shared b$ all or most
inhabitants of a countr$ and
sha"es their behavior and the 8a$ the$ see the 8orld Organizational and
national cultures differ in that national culture has a greater effect on
em"lo$ees than does organizational culture
A/ De&,%i.e 6of&te+e2& fo(% ,)!%!,te%i&ti,& of n!tion!$ ,($t(%e/
Geert 4ofstede found that national cultures differed on four
dimensionsC &a( individualism vs
collectivism2 8hich describes 8ho itAs believed is res"onsible for caring
for "eo"leRthe individual or the grou"H &b( "o8er distance2 or the e@tent
to 8hich a societ$ acce"ts the fact that "o8er is distributed une/uall$H &c(
uncertaint$ avoidance2 or the degree to 8hich "eo"le are tolerant of
behavior and o"inions that differ from their o8nH and &d( /uantit$ of life
&assertiveness and the ac/uisition of mone$ and material goods( vs
/ualit$ of life &im"ortance of relationshi"s and concern for the 8elfare
of others(
B/ 6o9 ,!n !n (n+e%&t!n+in" of 6of&te+e2& fo(% +i#en&ion& )e$4 #!n!"e%&
.e #o%e effe,ti'e in #!n!"in" in ! "$o.!$ #!%8et4$!,eO
Gnderstanding these four dimensions hel"s managers be more effective in
managing in the global mar)et"lace b$ identif$ing those countries that are
most li)e and least li)e the Gnited States2 8here GS managers 8ould be
li)el$ to fit best2 and 8here the$ 8ould have the biggest ad%ustment
#roblems
PART A ? M!%8
>/ Definition Ff #!n!"e#entO
Management is the art and science of getting 8or) done through "eo"le .t is
the "rocess of giving direction and controlling of various activities of "eo"le to
achieve the ob%ectives of organization
!""NT# $ %E&'R&C'
DManagement is the "rocess of designing and maintaining of an environment
in 8hich individuals 8or)ing together in grou"s effectivel$ accom"lish selected
aimsE
(.%.TA)*"R
DManagement is the art of )no8ing 8hat do $ou 8ant to do and then seeing
that is done in the best chea"est 8a$E
?/ S8i$$& nee+e+ fo% #!n!"e%&:
Technical skill
1 .t refers to the abilit$ to the tools2 e/ui"ment "rocedure and techni/ues
6 Effective su"ervision and co-ordination of the 8or) a grou" members or
subordinates
'uman skill
1 .t refers to the abilit$ of the manager to 8or) effectivel$ as a grou" members
and to build co-o"erative effort in team leaders
6 !eeded to understand "eo"le
Conceptual skill
1 .t is also called as design and "roblem
6 To see the organization and the various com"onent of it as 8hole
? To understand ho8 its various "arts and functions mesh together
@/ Diffe%ent !44%o!,)e& of #!n!"e#ent
1 Classical -""roach
6 'ehavioral -""roach
? Management Science -""roach
I S$stem -""roach
J Contingenc$ -""roach
1/ Co#4!%i&on .et9een !%t !n+ &,ien,e/
+cience:
.t is a s$stematic bod$ of )no8ledge 8ith arra$ of "rinci"les
Art:
1 .t is the a""lication of s)ill in finding desired results
6 Management is both science and artC
? .t contains general "rinci"le
I .t also an art because it re/uire certain "ersonal s)ills to achieve desired
result
A/ F(n,tion& of #!n!"e#ent
1 #lanning
6 Organizing
? Staffing
I Co ordinating
J Controlling
B/ M!n!"e#ent $e'e$ !n+ f(n,tion&/
1 To"-level management
6 Middle level management
? ,o8er level management
Top level management ,unctions
1 To formulate goals and "olicies
6 To formulate budgets
? To a""oint to" e@ecutives
Middle level management ,unctions.
1 To train motives ;develo" su"ervisor$ level
6 To monitor and control the o"erations "erformance
*o- level management
1 To train ;develo" 8or)ers
6 To assign %ob
? To give orders and instructions
I To re"ort the information about the 8or)ers
C/ W)!t to 3o( #e!n .3 &o,i!$ %e&4on&i.i$it3P &o,i!$ %e&4on&i'ene&&/
Cor"orate social res"onsibilit$ is seriousl$ considering the im"act of the
com"an$As action on societ$
Social res"onsiveness means Dthe abilit$ of a cor"oration to relate its
o"erations ; "olicies to the social environment in 8a$s that are mutuall$
beneficial to the com"an$ and to societ$
D/ W)!t i& in&tit(tion!$i*in" et)i,&P )o9 it ,!n .e !,,o#4$i&)e+O
.nstitutionalizing ethics means a""l$ing ; integrating ethical conce"ts in to
dail$ actions This can be accom"lished in three 8a$s
1 '$ establishing a""ro"riate com"an$ "olic$ or a code of ethics
6 '$ using a formall$ a""ointed ethics committee
? '$ teaching ethics in management develo"ment "rograms
E/ W)!t i& et)i,&O W)!t !%e t)e t34e& of et)i,& e:4$!inO
Ethics is defined as the disci"line dealing 8ith 8hat is good ; bad and 8ith
moral dut$ ; obligation
The three t$"es of ethics are
Personal ethics:
The rules b$ 8hich an individual lives his or her "ersonal life
Accounting ethics:
The code that guides the "rofessional conduct of accountants
.usiness ethics:
Concerned 8ith truth; %ustice ; has a variet$ of as"ects such as
e@"ectations of societ$ *air com"etition2 advertising2 "ublic relations2 social
res"onsibilit$2 consumer autonom$ ; co-o"erate behavior
>F/ W)!t !%e t)e !%"(#ent& !"!in&t t)e &o,i!$ in'o$'e#ent of .(&ine&&O
1 Social involvement ma$ reduce economic efficienc$
6 Social involvement 8ould create e@cessive costs for business2 8hich cannot
commit its resources for social action
? Social involvement can 8ea)en the international balance of "a$ment
I it ma$ leads to the hi)e in "rices of the commodities
J .ncom"lete su""ort for involvement in social action ;;disagreement among
grou"s 8ill cause friction
K There is a lin) of accountabilit$ of business to societ$
>>/ W)!t i& to9& #et%i,&O
The to8s metrics is a conce"tual frame 8or) for a s$stematic anal$sis2
8hich facilitates matching the e@ternal threats and o""ortunities 8ith the internal
8ea)ness ; strength of the organization .n the to8s metrics FTA stands for
threatAsA stands for o""ortunities F7A for 8ea)ness and FSA for strength
>?/ Definin" 4$!nnin" 4%e#i&e&O
#lanning "remises are defined as the antici"ated environment in 8hich "lans
are e@"ected to o"erate The$ include assum"tions or forecasts of the future ;
)no8n conditions that 8ill effects the o"eration of "lans
>@/ Li&t o(t t)e &o,i!$ %e&4on&i.i$itie& of #!n!"e%&O
Res"onsibilities to8ards share holders
Res"onsibilities to8ards em"lo$ees
D D creditors
D D government
D D su""liers
D D com"etitors
D D general "ublic
>1/ W)!t i& &o,i!$ !(+itO
Social audit involves a commitment to s$stematic assessment of the
com"an$As main activities that have a social im"act re"orting to the societ$ on
relevant issues Ever$ voluntar$ social "rogram ends 8ith a social audit social
encom"asses ever$ "ossible area2 such as "ollution control2 training ;
develo"ment "romotion of minorities ; so on
>A/ Define ,o+e of et)i,&O
- code is a statement of "olicies2 "rinci"les or rules that guide behaviors
codes of ethics should guide the behavior of "ersons in all organizations ; in ever$
da$ of life
>B/ Li&t o(t t)e f(n,tion& of et)i,& ,o##ittee
1 4olding regular meeting to discuss ethical issues
6 Dealing 8ith Fgra$ areasA
? Communicating the code to all members of organization
I Chec)ing for "ossible violations of the code
J Enforcing the code
PART B
1 E@"lain the nature and sco"e of Management
6 Discuss the contribution of 4enr$ *a$ol to Management
? Discuss the contribution of *7Ta$lor to Management
I .s Management art or Science Comment
J E@"lain *unctions of Management
K E@"lain the different t$"es of 'usiness Organization
: E@"lain the contribution of Elton Ma$oAs 4a8throne E@"eriments
5 .s mgt a "rofession discuss
L E@"lain the role of Manager